US Senators urge IRS to accelerate crypto tax rules

US Senators, led by Elizabeth Warren D-MA and Angus King I-ME, are pushing for a faster roll-out of tax reporting regulations for crypto brokers, instead of a projected two-year timeline.

In a letter to Treasury Secretary Janet Yellen and IRS Commissioner Daniel Werfel, the Senators pointed to potential lost revenues totaling $50 billion annually and the need to conform to the Infrastructure Investment and Jobs Act’s stipulations.

“We are alarmed by the self-inflicted two-year delay for the rule’s implementation, which would… disadvantage law-abiding Americans and cause the federal government to lose out on billions of dollars in tax revenue,” they said.

The billions of dollars in lost revenue are largely attributed to misunderstandings about crypto tax obligations or intentional tax evasion, according to the Senators.

In August, the IRS released a comprehensive 300-page proposal detailing crypto tax reporting guidelines with updated provisions relating to the definition of a “broker” as stipulated in the Jobs Act more than two years ago.

The act seeks to establish clear tax reporting standards for the crypto industry, attempting to provide, what policymakers have touted as, greater transparency comparable to other traditional financial sectors.

The senators commended the essence of the proposed regulations and the agencies’ endeavors to ensure continued crypto activity reporting by taxpayers. 

However, they had expressed significant concerns that the final rule would not be in effect until 2026, even though it had been initially scheduled for the next year.

The Treasury Department and IRS have taken nearly two years to promulgate rules concerning those stipulations, making it highly doubtful that the Administration would adhere to Congress’s directive, the senators said.

“Limiting any further delay in the implementation of the Administration’s proposed rule would combat industry efforts to evade regulation, provide clarity to law-abiding taxpayers and generate billions in tax revenue from a chronically tax-avoidant industry,” they said.

As such, policymakers are urging the agencies to implement the proposed crypto broker reporting rule as “rapidly as possible” and have requested an update by no later than Oct. 24.

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