The IRS will not go after bitcoin miners according to the reports by the Biden administration team as they are not interested in applying the Senate infrastructure bill’s definition of “broker” to miners, developers, and validators as we are reading more in our latest Bitcoin news.
The recently passed Senate bill will alter the definition of the broker to cover the ones dealing in digital assets. Crypto advocates are worried that this could include non-custodial actors such as miners and the Treasury won’t interpret the bill broadly.
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If the recently passed bill is signed into law, it will change legally the definition of a broker for tax purposes to about anyone that is handling crypto. But it doesn’t mean that US regulators will interpret it in that way.
The Treasury Department that oversees the Internal Revenue Service and the Financial Crimes Enforcement Network among other bureaus is gearing up to offer more guidance that will not require third parties that arent asset brokers to follow new crypto tax reporting rules. The cryptocurrency world got thrown into a furry last month when the $1 trillion infrastructure package being considered in the Senate included a provision defining “any person who is responsible for and regular provides and services effectuating transfers of digital assets” as brokers requiring them to file 1099 forms with the IRS on behalf of the customers.
The industry lobbyists argued that the tax reporting requirement will require miners and validators to file tax forms on behalf of the ones whose transactions they were validating and not to mention crypto protocol developers and wallet providers. The groups like the Blockchain Association and Coin Center pointed out that the tax information will be all but impossible to obtain and can even shill down the industry.
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The IRS will not go after the BTC miners as crypto advocates worked so hard to amend the bill but those efforts were fruitless once the last-ditch effort to exempt miners, validators, and others got blocked by Senator Richard Shelby of Alabama.
A quick little thread on the admin’s stance on the crypto tax fight, based on a convo I had with an official this week. First of all, they say the notion that they’d apply third-party tax reporting rules to entities like miners that aren’t actually brokers is silly. 1/x
— Victoria Guida (@vtg2) August 13, 2021
The bill is headed to the House where the speaker Nancy Pelosi said it won’t receive a vote until Senate Democrats get 50 votes needed to pass the separate $3.5 trillion spending bill and changes to the bill are far from assured. The provision had other purposes from the administration’s point of view as per Guida’s source. It gave the IRS more authority over crypto taxation and the broad language in the bill gives the Treasury a leeway to regulate the technology as it changes. The Blockchain Association Executive Director Kristin Smith said that the report validates the industry’s concerns as the crypto provision in the infrastructure bill includes a drafted language that needs more clarification.
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