Blockchain Association Critiques IRS’s Proposed Broker Rule

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As a seasoned crypto investor with a deep understanding of the regulatory landscape, I strongly agree with the Blockchain Association’s critique of the IRS’s proposed broker rule. The burden of over 8 billion forms required under the rule would not only be impractical but also a clear violation of the Paperwork Reduction Act (PRA).

The Blockchain Association wrote a comment letter, in accordance with the Paperwork Reduction Act (PRA), regarding the IRS’s proposed broker rule.

The letter argues that approving a rule requiring over 8 billion form submissions goes against the provisions of the PRA.

Blockchain Association Critiques IRS Broker Rule

As a researcher, I’ve come across the Blockchain Association’s stance against the proposed broker rule. According to their perspective, this regulation imposes an excessive burden on brokers. Marisa Tashman Coppel, a representative of the association, explained that the primary objective of the PRA is to safeguard the public from having to comply with regulatory requirements related to obtaining information from federal agencies.

As a analyst, I would express it this way: According to the PRA (Procedure Act), it is my responsibility to ensure that the burdens on the public are minimized to the greatest extent possible. However, the proposed rule does not meet this requirement.

One possibility: Today, the Blockchain Association submitted a comment under the Paperwork Reduction Act in response to the Internal Revenue Service’s proposed broker rule.

In simpler terms, it’s against the rules set by the PRA to approve a regulation resulting in over 8 billion forms being produced.

— Marisa Tashman Coppel (@MTCoppel) June 21, 2024

According to the association’s estimation, if the IRS assumes that it takes brokers 30 minutes per form to comply with their rules, this would equate to a staggering 4 billion hours in total burden and an increase of nearly one-third to the overall paperwork burden imposed by the U.S. federal government. This calculation highlights the fact that the IRS has underestimated the true time and costs required for brokers to adhere to these regulations.

Financial Implications of the Proposed Rule

As a crypto investor, I’ve calculated that it takes the IRS an estimated hourly cost of $63.53 to complete each form. With approximately 4 billion hours required in total, this equates to a staggering cost of over $254 billion. This figure is significantly higher than the potential tax revenue, even if every cent of global crypto earnings were taxed at the maximum rate. As a result, we’re facing a substantial gap of around $10 billion.

The Blockchain Association points out that it’s unwarranted to allocate $254 billion to bridge a $10 billion shortfall. Marisa Tashman Coppel asserts that the suggested regulation and accompanying Form 1099-DA fall short of meeting the demands set by the PRA. Consequently, the IRS has underestimated the financial and time pressures on brokers significantly.

At the same time, the Internal Revenue Service (IRS) had recently introduced a preliminary version of a new tax form known as Form 1099-DA. This form is specifically intended for reporting cryptocurrency transactions to the IRS by both brokers and their customers dealing in virtual assets. According to the IRS, this form aims to improve tax compliance regarding these transactions.

Variant Fund CLO and Digital Chamber CEO Offer Insights

Jake Chervinsky, as the Chief Legal Officer at Variant Fund, has dropped a hint about initiating a legal action against the IRS over this tax-related matter. Chervinsky strongly criticizes the IRS for relying on financial surveillance to enforce tax regulations, despite their neglect of advanced technologies facilitating P2P transactions.

Perianne Boring, the CEO of the Chamber of Digital Commerce, provided significant insights during the review process for the most recent version of IRS Form 1099-DA.

As an analyst, I agree with the IRS’s stance on expanding regulatory oversight to unhosted wallets. This alignment with KYC (Know Your Customer) rules for crypto sales and exchanges facilitated through brokers is consistent with the IRS’s persistent efforts towards ensuring compliance and disclosure in the cryptocurrency sector.

Digital Chamber CEO Shares Vital Insights Into IRS’ Crypto Tax Form 1099-DA

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2024-06-21 19:31