Rep. Patrick McHenry, a US Republican, sent a letter to the Treasury Department seeking clarification on a part of the digital asset tax that had been poorly worded.
Patrick McHenry, who will take over as chairman of the US House Financial Services Committee in January, has requested that the US Treasury delay implementation of a provision of the Infrastructure Investment and Jobs Act that deals with the collection of taxes on digital assets. .
On December 14, a letter with questions and concerns about the scope of Article 80603 of the Law was delivered to janet yellen, who is the United States Secretary of the Treasury. The letter was sent by McHenry.
In the letter, he asked for clarification on a section of the bill that deals with the taxation of digital assets and is scheduled to take effect in 2023. He claimed that the section was poorly drafted and could put people’s privacy at risk.
According to him, the provision requires the government to recognize digital assets as the equivalent of currency for tax purposes. This can put the privacy of US citizens at risk and have a negative effect on innovation.
Pursuant to the requirements outlined in the section of the tax code titled – Information Reporting for Brokers and Digital Assets, brokers are required to report specific information about their transactions involving digital assets to the Internal Revenue Service. This information must be provided in a specific format (IRS).
There is a provision in the Act that requires disclosure to the Internal Revenue Service of any digital asset transaction having a value of more than $10,000 by any person or corporation engaged in trade or business. The amount of $10,000 is the minimum that must be reported for this requirement.
The requirement was challenged earlier this year by Coin Center, a nonprofit advocacy organization that focuses on blockchain technology. The organization has taken legal action against the Treasury Department, arguing in its complaint that the regulation would subject people in the United States to an extensive surveillance program.
On Twitter, Senator Rob Portman shared a letter from Jonathan Davies, US Assistant Secretary for Legislative Affairs, stating that parties such as cryptocurrency miners and stakers are not subject to the new law. Portman is the one who actually sent the Davies letter.
At the end of his letter, McHenry requested that Treasury publish the regulations described in the section as quickly as possible and push back the effective date of the section to allow “market players” more time to comply with any additional obligations that may arise.
This is the second correspondence McHenry has sent to Yellen so far this year. On January 26, she received a letter from him urging the Secretary of the Treasury to provide further clarification on the definition of a broker.