On the weekend of August 7-8, 2021, the U.S. Senate was in session on an infrastructure bill called the Infrastructure Bill. Among other things, the bill deals with $1 trillion in funding to build road and transportation infrastructure, support clean energy, and construct bridges. The biggest controversy in the bill is the provision for taxing cryptocurrency transactions. More on the Infrastructure Bill and actions taken by the Biden administration in this article.
What is the Infrastructure Bill amendment about?
The infrastructure bill amendment was presented by the senate. A compromise amendment was presented by Senators Pat Toomey (Pennsylvania), Cynthia Lummis (Wyoming), Kyrsten Sinema (Arizona) and Rob Portman (Ohio). It clarifies the exact definition of a “broker” who, under the current rule text, will be required to report profits derived from crypto transactions by filing a 1099 tax form.
Until now, the Act has defined “broker” as “any person who (for compensation) is responsible for regularly providing any service relating to the transfer of digital assets on behalf of another person.” According to some people, this term is too broad because it can include miners, programmers, and other stakeholders who perform digital asset transfer activities but do not have enough information about their clients to properly complete a Form 1099.
The amendment to the bill received support from Treasury Secretary Janet Yellen, however the Senate still did not vote unanimously. On Monday’s vote, Alabama Senator Ruchard Shelby was opposed, and since unanimity was required to pass the amendment, the original definition of “broker” will remain in place for the time being. The next vote is scheduled for Tuesday, August 10, 2021.
Toomey’s proposed amendment to the bill is causing quite a controversy among Americans. It would require all brokers to report to the IRS on transactions over $10,000, including miners. But after all, miners don’t have access to the information necessary to file Form 1099.
Requirements to collect information about the entity that conducts the transaction (such as names, addresses, transaction amounts) is also an issue that hits privacy hard – which is, after all, what cryptocurrencies are known for. The blockchain and the transactions that take place in it do not tie information to an individual, but rather to a series of actions that have taken place before, so cryptocurrency markets do not automatically allow for the collection and reporting of information about their users.