US lawmakers urge IRS to implement crypto tax reporting requirements before 2026

The crypto tax reporting requirements proposed by the IRS in August are currently scheduled to go into effect in 2026 — according to 7 senators, that isn’t soon enough.

Seven members of the United States Senate have called on the Treasury Department and Internal Revenue Service (IRS) to advance a rule imposing certain tax reporting requirements for crypto brokers “as swiftly as possible”.

In an Oct. 10 letter to Treasury Secretary Janet Yellen and IRS Commissioner Daniel Werfel, a group of U.S. senators including Elizabeth Warren and Bernie Sanders criticized a two-year delay in implementing crypto tax reporting requirements, which are scheduled to go into effect in 2026 for transactions in 2025. The lawmakers claimed delaying implementation of the rules could cause the IRS to lose roughly $50 billion in annual tax revenue, and continue policies allowing bad actors to avoid paying taxes.

“While we applaud the substance of the proposed regulations and your agencies’ efforts to ensure taxpayers continue to report crypto activity, we are deeply concerned that the final rule will not become effective until 2026,” said the letter. “[A]ny delay would give crypto lobbyists even more opportunity to undermine the Administration’s efforts to impose basic reporting requirements on the nearly unregulated crypto sector, at a time when the industry is already pushing to repeal the recently enacted reporting requirements. The time to act is now.”

Warren took to X (formerly Twitter) on Oct. 11 to refer to crypto as “the not-so-secret financial weapon” funding Hamas amid the group’s war with Israel. Following requests from Israeli law enforcement, crypto exchange Binance announced it had frozen accounts linked to Hamas on Oct. 10.

It’s alarming and should be a wakeup call for lawmakers and regulators that digital wallets connected to Hamas received millions of dollars in cryptocurrencies. https://t.co/yUVSIElI8v

— Elizabeth Warren (@SenWarren) October 11, 2023

Related: IRS releases draft of proposed reporting rules for digital asset brokers

The crypto reporting requirements, proposed by the IRS in August, were still open to public comments until Oct. 30. Brokers would be required to “help taxpayers determine if they owe taxes” through crypto as well as report information on digital asset transactions. Representative Patrick McHenry, currently acting as interim House Speaker following Republican lawmakers voting to declare the office vacant, has criticized the measure as an “attack on the digital asset ecosystem”.

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