The Blockchain Association opposes the IRS broker rule to the letter
The Blockchain Association again opposes the Internal Revenue Service's (IRS) proposed broker-dealer regulations. At this point, the regulations focus on an undue burden placed on investors, cryptocurrency companies, and the Internal Revenue Service itself.
In the letter, the industry advocacy group cited the Paperwork Reduction Act as saying that government regulators should not impose unnecessary and unclear paper requirements on individuals and entities involved in the financial system.
A spokesperson for the Blockchain Association argued that signing these proposed rules into law would add 8 billion 1099-DA tax forms, 4 billion hours of wasted labor to process the forms, and $254 billion in annual compliance costs.
According to figures in the letter, the maximum compliance costs and labor burdens are a far cry from previous IRS projections, which estimated that the new rules would take 0.15 hours per customer to complete, with a total compliance cost of $136,350,000.
Additionally, the Blockchain Association concluded that imposing $245 billion in annual compliance costs would be completely unreasonable for an asset class and market that would result in a tax gap of at most $10 billion.
The first protest letter from the Blockchain Association
In the year The Blockchain Association has written a 39-page letter to the IRS outlining a comprehensive list of objections to the government agency's proposed brokerage regulations in 2023.
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The industry advocacy group said the Internal Revenue Service has reached out to the government with proposed broker reporting rules, saying certain entities in the blockchain ecosystem, such as decentralized financial protocols, would struggle to comply with those rules at best.
Finally, the letter highlights “fundamental misunderstandings” about cryptocurrencies, digital assets and decentralized finance by US government officials who are struggling to wrap their minds around the paradigm shift brought about by blockchain.
It is not very popular among the crypto community
The tax rules and reporting requirements from the Internal Revenue Service have sparked outrage among the crypto community, as many individuals and institutions have shown disdain for the out-of-touch requirements.
Echoing the opposition in the Blockchain Association's first letter, CoinCenter Executive Director Jerry Brito pointed to the logistical difficulties of placing these reporting requirements on decentralized networks and their participants.
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