FSC Chair Calls for Revamp of US Crypto Tax Plan
Nine US congressmen, spearheaded by the chair of the House Financial Services Committee, have asked the Treasury to reconsider its plans for crypto tax reporting.
Some members of Congress, including Patrick McHenry, who chairs the House Financial Services Committee, are worried about the crypto tax system that is part of the Infrastructure Investment and Jobs Act.
The congressmen said in a bipartisan letter sent to Lily Batchelder, the Assistant Secretary of the U.S. Department of the Treasury, on November 10 that the tax reporting requirements for participants in the digital asset market are “unworkable as written” and will impede innovation.
Decentralized finance (DeFi) protocols and other non-traditional companies would be included in the Treasury’s too broad definition of “Broker,” according to the MPs who criticized the proposal.
Legislators claim that the Treasury’s expanded definition of “Broker,” which includes “persons that are in the position to know the identity of the party,” would ensnare DeFi protocols.
Since the “position to know standard” includes more entities than the “ordinarily would know” criterion, this new interpretation will include DeFi protocols in the definition of broker. “Ordinarily would know” who the party is not something that DeFi protocols “apparently” know.
Also, according to the senators, crypto-focused businesses would end up filing duplicate reports with the IRS and American taxpayers because of the Treasury’s definition of a broker.
Legislators think this is pointless since it would increase the IRS’s operational costs and burden both the agency and taxpayers with needless data.
In light of these and other considerations, the legislators had concrete demands, such as requesting that the Treasury review and prolong the implementation time of the regime.