See More

Congressmen Call Crypto Market a ‘Major Source of Tax Evasion’

2 mins
Updated by Geraint Price
Join our Trading Community on Telegram

In Brief

  • US lawmakers urge tax authorities to finalize reporting requirements for crypto tax.
  • The US Treasury reportedly has yet to promulgate broker reporting rules it reviewed in February.
  • Rep. Brad Sherman (D-Calif.) is a known crypto skeptic.
  • promo

US Congressmen Brad Sherman (D-Calif.) and Stephen Lynch (D-Mass.) have implored the US Treasury and Internal Revenue Service (IRS) to urgently curb “major tax evasion.”

The request follows Treasury’s announcement that cryptocurrency brokers need not track customer transactions until it revised broker reporting regulations included in the Infrastructure Investment and Jobs Act.

Congressmen Urge IRS to Prioritize Broker Definition

The lawmakers argue that brokers need the new laws to comply with filing requirements for the 2023 financial year. The Office of Management and Budget’s Office of Information and Regulatory Affairs reportedly completed its review of planned regulation in February.

“The cryptocurrency industry had all of 2022 to prepare for the infrastructure law’s tax reporting requirements, and now it apparently gets off.”

The laws require brokers to track and report crypto transactions to the US IRS.

The original Infrastructure Bill would have earned the US government over $30 billion from crypto taxes in a decade. Senator Cynthia Lummis (R-Wyo.) and Pat Toomey (R-Pa.) opposed the bill’s broad definition of a crypto broker.

Time will tell whether the new crypto tax rules will further disincentivize the US crypto industry.

A mining excise tax, which for now appears to have been axed, together with the crypto broker rule, could have made mining unprofitable in the US.

Already, China has partially recovered to house one-fifth of the global hashrate, encroaching on the 38% US miners currently enjoy.

Sentiment around the industry is souring after the US Securities and Exchange Commission (SEC) sued the largest US exchange Coinbase for operating as an unregistered broker-dealer.

Bitcoin reserves at US exchanges have also fallen below international rivals. Coinbase CEO Brian Armstrong said he would consider Coinbase leaving the US if regulations remained murky.

Sparse US Case Law Defines Crypto Tax

Until the US Treasury and IRS promulgate revised regulations, rules around crypto tax are primarily built on 2014 guidelines and case law. The IRS taxes digital assets like property.

To learn more about US crypto taxation, click here.

In 2021, Tennessee couple Joshua and Jessica Jarret sued the IRS for taxing them on self-generated crypto staking rewards. The couple refused a refund.

Instead, they asked the court to grant assurance the IRS would not similarly tax them in the future. The court rejected the request, rendering the case moot.

Case law also fully determines federal attorney-client privilege associated with tax advice.

For BeInCrypto’s latest Bitcoin (BTC) analysis, click here.

Top crypto platforms in the US | March 2024

Trusted

Disclaimer

All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.

David-Thomas.jpg
David Thomas
David Thomas graduated from the University of Kwa-Zulu Natal in Durban, South Africa, with an Honors degree in electronic engineering. He worked as an engineer for eight years, developing software for industrial processes at South African automation specialist Autotronix (Pty) Ltd., mining control systems for AngloGold Ashanti, and consumer products at Inhep Digital Security, a domestic security company wholly owned by Swedish conglomerate Assa Abloy. He has experience writing software in C,...
READ FULL BIO
Sponsored
Sponsored