The largest cryptocurrency exchange in the United States, Coinbase (COIN), claims that a recent IRS plan will jeopardize both the industry and the privacy of Americans.Recently, the IRS had put up a rule to formally classify crypto brokers and give them guidance on how to correctly file taxes on behalf of both themselves and their clients.But in a letter of submission to the organization on Thursday, Coinbase claimed that the proposed rule would amount to “an unprecedented, unchecked, and unlimited tracking on the daily lives of Americans.”
“These rules would establish an incomprehensible and unduly burdensome set of new reporting requirements that will degrade and displace the same taxpayer services the IRS is seeking to improve,” according to the letter from Lawrence Zlatkin, the vice president of tax for Coinbase Global Inc.
The Blockchain Association, a U.S.-based organization that promotes cryptocurrencies, had previously stated that enacting these restrictions may destroy the sector in the country.The IRS’s most recent “tax gap” estimate, which indicates how much tax money the agency should be getting but isn’t, came out hours before Coinbase sent its letter, and it had plenty to say about how cryptocurrency was reducing tax collections.According to that estimate, estimates can’t take into consideration noncompliance in several sectors, including “issues involving digital assets and cryptocurrency.” Crypto was singled out as a part of the expanding issue.
The 2021 Infrastructure Investment and Jobs Act was finally going to be complied with, so the Treasury Department submitted a roughly 300-page proposed rule in August.It specifies the reporting requirements for centralized cryptocurrency exchanges, payment processors, some hosted wallet providers, some decentralized exchanges, and individuals or businesses that redeem cryptocurrency tokens.Sen. Elizabeth Warren (D-Mass.) and other Democratic senators this week sent their own letter to the IRS in which they urged the organization to disregard business complaints.The main concern of the legislators was that the proposed laws would take too long to implement, which would “disadvantage law-abiding Americans” and “cause the federal government to lose out on billions of dollars in tax revenue.”The senators advised implementing the rule “as quickly as possible.”
But Coinbase asked the IRS to re-write the proposal “to limit compliance requirements to those parties that directly effectuate transactions in digital assets similar to those in traditional finance.”
Before taking into account a final regulation, the agency must analyze the public comments that were submitted up until the deadline of October 30.