Incoming House Financial Services Committee Chair Asks Secretary Yellen to Delay Crypto Tax Provision
Rep. Patrick McHenry. who chairs the committee in January, expressed his concerns in a letter to Treasury Secretary Janet Yellen.
The top Republican on the House Financial Services Committee wants the U.S. Treasury Department to delay implementing the crypto tax provisions in last year's Infrastructure Investment and Jobs Act until there is further clarity around who's covered by the bill.
Rep. Patrick McHenry (R-N.C.), the current ranking member but who will its chair when Republicans take over the U.S. House of Representatives in the new Congress next month, wrote Treasury Secretary Janet Yellen saying the provision shouldn't be implemented until taxpayers know who will have to meet its requirements.
At issue is the definition of a "broker" for tax reporting purposes. When the legislation – then known as the Bipartisan Infrastructure Bill – was introduced last year, industry participants warned the definition of a "broker" was overly broad, and could force entities such as miners and crypto wallet manufacturers to abide by tax reporting rules they physically would not be able to meet.
"A number of questions and concerns remain unanswered regarding the scope of Section 80603," wrote McHenry. "These questions and concerns must be addressed to ensure taxpayers have clear direction on the forthcoming requirements and the date required for compliance," he continued in the letter dated Dec. 14. "Section 80603 is poorly drafted. As such it could be wrongly interpreted as expanding the definition of a ‘broker’ beyond custodial digital asset intermediaries."
The Treasury Department has not issued formal guidance addressing this provision, but has said in letters to lawmakers that it would not include certain groups, such as miners, in the definition of "broker."
"Treasury’s acknowledgement that ‘ancillary parties who cannot get access to information that is useful to the IRS are not intended to be captured by reporting requirements for brokers’ is a positive step," McHenry's letter said, referring to the Internal Revenue Service. "It is also consistent with the policies outlined in H.R. 6006, Keep Innovation in America Act, which I introduced last year."
A Treasury spokesperson did not immediately return a request for comment.
The letter also takes issue with another provision, which would incorporate crypto into Treasury's definition of "cash," which in turn would impose new reporting requirements on any U.S. taxpayers who receive over $10,000 in cryptocurrency. These requirements would include personal information from the senders, including Social Security numbers.
Industry group Coin Center sued the Treasury Department earlier this year over the provision, calling it "unconstitutional."
"The 6050i reporting requirements jeopardize the privacy of Americans, without a comprehensive analysis of the impact of such change," McHenry's letter said.
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