The United States Congress passed a $ 1.2 trillion bill to improve the country’s infrastructure, funded by a series of measures, including the taxation of brokers. Cryptocurrencies.
The bill, which was passed by Congress in the final vote of 228-206, marks a historic moment for the US cryptocurrency sector. In drafting the law, senators inserted a rule that would change the definition of an internal revenue service called a “broker” to include companies that trade in crypto-assets.
This means that if the bill is signed by President Biden, centralized companies such as Coinbase (NASDAQ 🙂 will be considered “brokers” and will have to report their transactions directly to the IRS.
Brokers must fill out forms that reveal the names and addresses of their clients. As a result of the proposed reporting requirements, it is assumed that the government could raise an additional $ 28 billion in taxes through cryptocurrencies.
When the bill was drafted, cryptocurrency companies expressed their concern that the new definition of “broker” could involve miners, validators, portfolio companies and developers if it was interpreted illegally. However, due to the widespread anonymity of the crypto verse, it is impossible to meet the strict reporting requirements.
In early August, when the law was passed, the Senate rejected an amendment exempting cryptocurrency companies from the requirements of the new tax return.
The Toomey-Warner-Lummis-Sinema-Portman amendment seeks to clarify that non-security agencies such as miners, appraisers, portfolio providers and protocol developers are not required to report to the IRS.
The cryptocurrency advocacy group Proof of Stock Alliance (POSA) – which calculates Coinbase custody among its members – issued a statement in September confirming the “forgotten” amendment to the tax code (Section 6050I) included in the Infrastructure Act. It is an offense to falsely report the acquisition of digital assets.
The POSA report argued that the account meant that they had to report a receipt for digital assets worth more than $ 10,000, including the investor’s identification and social security number.
Furthermore, the amendment of section 6050I may even be considered unconstitutional. Anyone who currently receives $ 10,000 in cash from the tax code must report it to the IRS. With fiat money, that responsibility is constitutional because a bank acts as a third party, but in a peer-to-peer world of crypto-transactions, authorities need a warrant under the Fourth Amendment, says Peter, director of research at the Coin Center. Von Walkenberg.
Although the Treasury has made it clear that the new legal definition of “broker” cannot include non-custodians, there is still much for the government to clarify before investors are satisfied with the plan. However, if the President gives his approval, it will be a good thing for the IRS.
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