Several Republican senators criticized a cryptocurrency tax scheme included in the infrastructure bill the Senate passed Tuesday.
The bill includes a tax reporting mandate for “digital assets,” or cryptocurrencies, which would force “brokers” of digital assets to disclose gains and transactions to the IRS. The provision, included to help offset the $1.2 trillion cost of the legislation, could raise $28 billion in tax revenue over the next decade.
Several Senate Republicans criticized the legislation for defining a broker as “any person who is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person,” which they say is too expansive and unfeasible.
“This legislation imposes a badly flawed, and in some cases unworkable, cryptocurrency tax reporting mandate that threatens future technological innovation,” Sen. Pat Toomey said in a press release Tuesday after the bill had passed.
The infrastructure package we voted on today is too expensive, too expansive, and too unpaid for. I could not support it. My full statement: pic.twitter.com/IQPguSdkry
— Senator Pat Toomey (@SenToomey) August 10, 2021
Toomey previously argued the definition of broker was too vague and may include people who cannot comply with the mandate, such as cryptocurrency miners and hardware manufacturers. Sen. Ted Cruz, speaking on the Senate floor Monday, said the bill would infringe on privacy by forcing individuals to disclose private information to the IRS and throttle financial innovation.
“This overly broad definition of the word ‘broker’ will block rapid innovation in cryptocurrencies and it will endanger the privacy of many Americans and cryptocurrencies,” Cruz said. “This is wrong.”
Cruz unsuccessfully argued Monday to remove all provisions relating to cryptocurrency from the bill. (RELATED: Court Authorizes IRS To Acquire Information On Cryptocurrency Users Who May Have Flouted Taxes)
I, along with bipartisan Blockchain Caucus co-chairs @RepDarrenSoto, @RepDavid, and @RepBillFoster sent a letter to every single Representative in the House raising concerns about the Senate infrastructure bill being paid for by our crypto industry. pic.twitter.com/MzsEmBbosr
— Tom Emmer (@RepTomEmmer) August 9, 2021
Toomey, along with Sen. Cynthia Lummis and Democratic Sen. Ron Wyden, proposed an amendment to the bill last week narrowing the scope of the tax mandate to exclude those who could not easily comply. The amendment, later revised in a compromise with Sens. Rob Portman, Kyrsten Sinema, and Mark Warner, still failed to make it into the final bill after facing opposition Monday from Sens. Bernie Sanders and Richard Shelby.
“Our effort to get a vote on a digital asset fix failed because other senators refused to set aside their disagreements to support something they could actually agree on,” Lummis tweeted Monday.
The bill will now head to the House, where members of the bipartisan Blockchain Caucus already issued a statement saying they will attempt to resolve the issues with the tax reporting mandate.
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