U.S. Senators Elizabeth Warren and Angus King have urged the Treasury Department and the IRS to expedite the implementation of proposed tax reporting rules for cryptocurrency brokers.
In a joint letter, the senators expressed concern that the two-year delay in enforcing the rules could result in significant losses of tax revenue for the U.S. government.
Experts estimate that crypto traders caused the IRS to lose $50 billion annually in 2022 due to a lack of awareness or avoidance of tax implications.
The lawmakers are concerned that the Treasury Department and the IRS’s proposed regulation of crypto trading and tax reporting could create challenges in managing the complex and rapidly growing crypto industry.
The senators praised the proposed regulations for providing clear definitions of “brokers” and “digital assets,” as they help clarify the roles and responsibilities of parties involved in crypto transactions. In particular, the rule defines brokers as any party that facilitates a crypto sale while having access to the identity of the seller and the details of the transaction.
Meanwhile, “digital asset” refers to any value that is recorded digitally, using cryptography or a similar technology, to provide security and verification.
Nevertheless, the legislators vehemently objected to the proposed 2026 commencement date.
The senators noted that the proposed effective date of 2026 is inconsistent with the 2021 Infrastructure Investment and Jobs Act, which requires crypto broker reporting on all tax returns filed from 2024.
They emphasized that the Joint Committee on Taxation has projected that these new requirements will generate significant tax revenue in the early years, revenue that would be lost if the implementation is delayed.
The senators wrote:
“The time to act is now.”
However, the lawmakers stressed that further delays would give crypto lobbyists more time to challenge the government’s efforts to regulate the largely unregulated industry.
Both Warren and King have requested that the proposed rule be implemented as soon as possible, and they have requested regular updates on the progress of the implementation by Oct. 24, 2023.