Senators Push for Immediate Crypto Broker Tax Reporting Rules

Sen. Elizabeth Warren (D-Massachusetts) and a handful of other senators urged the Internal Revenue Service and Treasury Department to institute tax reporting requirements for cryptocurrency brokers “immediately.”

Warren and others expressed concern that a final rule would not go into effect until 2026, citing Treasury’s nearly two-year delay in publishing the regulations.

In a letter dated October 10 to IRS Commissioner Daniel Werfel and Treasury Secretary Janet Yellen, senators wrote, “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.”

In August, the Treasury and IRS proposed crypto tax reporting rules that treat crypto brokers similarly to brokers for more conventional investments, such as equities.

The rules would require brokers to provide crypto users with tax-related information and require brokers and exchanges to report information on certain cryptocurrency sales.

The proposed regulations originate from the 2021 Infrastructure Investment and Jobs Act, which included crypto-specific language to increase broker reporting of customer crypto activity.

“While we commend the substance of the proposed regulations and your agencies’ efforts to ensure that taxpayers continue to report crypto activity, we are extremely concerned that the final rule will not go into effect until 2026,” the lawmakers said.

Senator Angus King of Maine The letter was signed by Richard Blumenthal, D-Connecticut, Bernie Sanders, I-Vermont, Sheldon Whitehouse, D-Rhode Island, Brian Schatz, D-Hawaii, and Gary Peters, D-Michigan.

A Treasury spokesperson said a public hearing is scheduled for Nov. 7, and the agency is attentively considering comments.

The Treasury Department has worked assiduously to implement the bipartisan Infrastructure Act, and the proposed regulations on the sale and exchange of digital assets by brokers will help close the tax gap and address the tax evasion risks posed by digital assets, according to a Treasury Department spokesperson.

Approximately 140 comment letters have been received thus far. The comment deadline is at the end of October.