Senator Elizabeth Warren, along with three other US Senators, expressed concerns to the Internal Revenue Service (IRS) about the need to tighten tax reporting regulations for organizations trading with cryptocurrency brokers. The senators’ common concern stems from the anticipated $1.5 billion tax revenue shortfall in the 2024 fiscal year due to existing regulatory loopholes.
Warren and Senators Reach Out to IRS
Crypto adversary Elizabeth Warren, along with Senators Bob Casey, Richard Blumenthal, and Bernie Sanders, prepared a letter addressed to IRS Commissioner Daniel Werfel. In this letter dated August 2, the senators demand the creation of strict cryptocurrency tax reporting laws.
The group’s initiative comes after the Infrastructure Investment and Jobs Act (IIJA) was passed in November 2021, which includes guidelines requiring third-party “crypto brokers” to report details about sales, gains, and losses to the IRS. The definition of “crypto brokers” has been expanded to include entities such as validators, wallet providers, and miners.
However, the senators are still not satisfied:
“Nearly two years have passed since the law came into effect, and there is less than six months left until the final implementation date. However, the Treasury has not yet published the proposed rules.”
The senators added the following warning to their statement:
“If we do not act quickly, your agencies risk not meeting the deadlines set by Congress for the implementation of a final rule.”
The senators are pressuring for the new rules to be published as soon as possible, with a deadline of December 31, 2023, and they expect a response to their letter by August 15.
Latest IRS Guidelines on Cryptocurrency
On July 31, the IRS issued a revenue ruling to clarify the taxation procedure for income derived from crypto gambling.
The ruling states that US crypto investors must report stake rewards as gross income in the fiscal year they are earned.
The IRS stated that the “fair market value is determined as of the date and time the taxpayer acquires dominion and control over the validation rewards.”
In summary, the action taken by Senator Warren and her colleagues underscores the growing concerns, especially in terms of tax reporting, regarding the management of financial activities related to cryptocurrency. The proposed changes aim to close potential loopholes and safeguard government revenue. The resolution of this issue is closely monitored by both the crypto industry and regulators.
