Blockchain Association Challenges IRS Broker Rules Over Imposed Burdens and Misunderstandings
Summary:
The Blockchain Association has again expressed concern over the IRS's proposed broker regulations, arguing they will impose a huge burden on investors, crypto businesses, and the IRS itself. By referencing the Paperwork Reduction Act, the association highlights the unnecessary paperwork load, which would necessitate processing 8 billion tax forms, consuming 4 billion labor hours, and lead to an annual compliance cost of a whopping $254 billion. The group identified the proposal as government overreach and underscored misunderstandings about cryptocurrencies and decentralized finance among U.S. officials. These IRS proposals have sparked widespread backlash from the cryptocurrency community.
Again, the Blockchain Association raises concern over the proposed brokerage regulations set forth by the Internal Revenue Service (IRS), pointing out the harsh impact these rules may have on investors, cryptocurrency businesses, and even the IRS. Drawing references from the Paperwork Reduction Act, the advocacy group contends that these regulations lay an unjust and complicated paperwork load on those participating in the financial ecosystem. The association members maintain that the proposal, if passed into legislature, will create a need to process 8 billion 1099-DA tax forms, consume 4 billion labor hours and present an annual compliance cost surging to $254 billion. The association's letter surfaces these estimates as far larger than the initially projected 0.15 hours per customer, costing a total of $136,350,000, by the IRS.
In its conclusion, the Blockchain Association states that the proposed annual compliance cost of $245 billion is impractical for a market generating a maximum tax gap of only $10 billion. Back in 2023, the association made its initial objection via a 39-page letter to the IRS, pointing out a comprehensive set of issues with the proposed brokerage regulations.
Reports reveal that the Blockchain Association expresses these initiatives by the IRS as overreaching. The advocacy group argues that, notably, decentralized finance protocols which are part and parcel of the blockchain infrastructure would face a tough challenge meeting the compliance of these regulations. The letter goes on to underline the "elementary misunderstandings" regarding cryptocurrencies and decentralization, a paradigm shift presented by blockchain, among the U.S. government officials.
These proposed tax regulations have sparked widespread disapproval within the cryptocurrency community. Both individuals and institutions have expressed their dissatisfaction with these seemingly unattuned requirements. Alongside the association’s first objection letter, Jerry Brito, executive director at Coin Center, highlighted the logistical hurdles posed by these reporting requirements on decentralized networks and their users.
Published At
6/22/2024 12:45:16 AM
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