IRS Unprepared for Crypto Tax Reporting, Senate Hearing Reveals
Coinbase's tax executive, Lawrence Zlatkin, informed U.S. senators that the IRS is unprepared for the volume of crypto tax reporting under current and future regulations.
Zlatkin emphasized the need for administrable rules due to the vast number of transactions in the crypto sector.
The IRS has established crypto brokerage forms, but key taxation questions remain unresolved, causing uncertainty for businesses and investors.
Senator Mike Crapo highlighted the lack of clear tax rules for digital asset transactions, leaving taxpayers with many unanswered questions.
Senator Elizabeth Warren criticized the crypto industry's attempts to secure favorable tax treatment, while Senator Ron Wyden acknowledged the need for congressional attention on crypto tax matters amid other priorities.
The IRS faces staffing challenges and leadership changes, raising concerns about its capacity to handle crypto tax issues.
The crypto industry seeks exemptions for de minimis transactions, certain rewards, and stablecoins from tax reporting.
Senator Cynthia Lummis proposed a bill addressing these concerns, including a $300 de minimis threshold, but its fate in the Senate is uncertain.
New IRS guidance may reduce tax burdens for some crypto firms, but it remains tentative and not yet enacted.
