Senators Urge IRS To Speed Up Plan To Snag Crypto Tax Cheats

A group of senators led by Democrat Elizabeth Warren and Independent Angus King is pushing U.S. tax officials to move up the start date for crypto brokerages and exchanges to report information on their clients’ transactions to the government. 

Proposed regulations released by the Internal Revenue Service and Treasury Department in August would require those firms to begin reporting data on sales and exchanges of digital assets in 2026—two years later than Congress had intended when it enacted legislation in 2021. 

“We are alarmed by the self-inflicted two-year delay for the rule’s implementation” that will cause the U.S. to miss out on billions of dollars in tax revenue, the senators wrote in a letter sent late Tuesday to Treasury Secretary Janet Yellen and IRS Commissioner Daniel Werfel. “We urge your agencies to limit this troubling delay and implement the final rule as swiftly as possible, while maintaining the rule’s substance in the face of industry attacks.”

A mix of other Democrats and Independents, including Senators Richard Blumenthal, Gary C. Peters, Bernie Sanders, Sheldon Whitehouse and Brian Schatz, also signed the letter. 

Treasury has said the delay gives brokers more time to adjust to the rules, which still haven’t been made final.

Chris Hayden, a spokesperson for the department, said in an email Wednesday that it has “has worked diligently” to implement the 2021 law and the proposed regulations. “Treasury will carefully consider all comments,” it receives on the rules. The IRS is part of Treasury. 

Once the rules are in place, the government has said they will help individuals file their taxes, while also making it easier to crack down on tax cheats. 

The lawmakers said they agree with the substance of the rules, which has been attacked by the crypto industry. 

House Financial Services Committee Chairman Patrick McHenry, a North Carolina Republican. Lawrence Zlatkin, Coinbase’s vice president of tax, in August called into question the practicality of the regulations and said the current proposal goes “well beyond the scope of pursuing wealthy tax cheats.”

So far, the IRS and Treasury have received more than 90 comments on the plan. 

The debate is likely to be front and center at a public hearing that the government has scheduled for Nov. 7, with a second taking place the following day if there’s a significant number of requests to speak.

This article was provided by Bloomberg News.