Democratic senators tell IRS to speed up crypto tax reporting rules

Sen. Elizabeth Warren, D-Mass, along with a handful of other senators urged the Internal Revenue Service and Treasury Department to implement tax reporting requirements for crypto brokers “as rapidly as possible.”

Warren and others said they were concerned that a final rule would not become effective until 2026, citing Treasury’s delay of almost two years to issue the rules.

“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,” the senators said in a letter dated Oct. 10 to IRS Commissioner Daniel Werfel and Treasury Secretary Janet Yellen.

New rules

The Treasury and the IRS proposed crypto tax reporting rules in August that would treat crypto brokers similarly to brokers for more traditional investments like stocks and bonds. The rules would specifically require brokers to provide crypto users with information needed to file their taxes and require brokers and exchanges to report information on certain sales on crypto.

The proposed regulations stemmed from the Infrastructure Investment and Jobs Act passed in 2021 that included crypto language to increase reporting made by brokers on customers’ crypto activity.

“While we applaud the substance of the proposed regulations and your agencies’ efforts to ensure taxpayers continue to report crypto activity, we are deeply concerned that the final rule will not become effective until 2026,” the lawmakers said.

Sens. Angus King, I-Maine, Richard Blumenthal, D- Conn., Bernie Sanders, I-Vt., Sheldon Whitehouse, D-R.I., Brian Schatz, D-Hawaii and Gary Peters, D-Mich., signed the letter.

Public hearing

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

“Treasury has worked diligently to implement the bipartisan Infrastructure Law, 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,” the spokesperson said.

The proposed rules have garnered about 140 comment letters so far. Comments are due at the end of October.

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