The estimated $1 trillion bipartisan infrastructure bill could be partially funded by taxes levied on cryptocurrency and digital-asset transactions.
The provision would require anyone engaged in the transfer of digital assets to report the information to the IRS, which is no different than what securities brokers are required to do, MarketWatch reported after examining a draft copy of the bill. The proposed bill also mandates businesses report digital-asset deals in excess of $10,000.
“Crypto has been around since 2008. For over 10 years, the space has had zero regulatory clarity, but it took the Senate all of a few days to use crypto taxes as pay-fors for a bloated infrastructure deal,” Rep. Warren Davidson (R-Ohio) told MarketWatch.
An avid and outspoken supporter of crypto, Davidson also told MarketWatch that he doesn’t know if the decision was “skillfully crafted or maliciously ignorant.”
Under the proposed measure, the IRS would be empowered to go after taxes owed that the government hadn’t known about since the transactions weren’t required to be reported. The Joint Committee on Taxation estimated that the new rules could bring in some $28 billion over 10 years.
“Instead of rushing through an untested provision with vast unintended consequences, we encourage Congress to work with the industry to find language that works for all stakeholders, keeping America at the forefront of crypto innovation,” Blockchain Association Executive Director Kristin Smith told MarketWatch.
The IRS has been increasing oversight on cryptocurrency and digital asset transactions and in May indicated transactions above $10,000 would be required to be reported to the IRS.
The tax authority said that cryptocurrency flies under the radar by “facilitating illegal activity broadly, including tax evasion.”