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Date: 2025-02-26 19:01:30
The U.S. House of Representatives has initiated a significant step towards revoking the Internal Revenue Service's attempt to enforce a tax system on decentralized financial (DeFi) platforms during the waning days of former President Joe Biden's administration.
The House Ways and Means Committee, which supervises the IRS under the Treasury Department, passed a resolution in a 26-16 vote to overturn the IRS's transaction-reporting policy under the Congressional Review Act. This action necessitates majority approval from both the House and Senate before a presidential signature can finalize it. The matter now proceeds to the full House.
Last December, the IRS sanctioned a mechanism that the crypto industry maintains obliges DeFi protocols to adhere to a reporting system intended for brokers. This could potentially jeopardize the functionality of these protocols and even encompass a broad spectrum of entities that are not brokers. Almost every major figure in the crypto sector endorsed a Blockchain Association letter last week, urging the abolition of this rule.
Senator Ted Cruz, a Texas Republican, has introduced a Senate version of the CRA resolution to eliminate the IRS rule.
"We must adopt this resolution to prevent this nightmare for American taxpayers and the IRS," declared Rep. Mike Carey, an Ohio Republican who has advocated for Congress to repeal the rule. He contended that it would burden the tax agency.
Democrat Rep. Richard Neal of Massachusetts refuted the Republican effort.
"The legislation before us today would repeal prudent and vital Treasury regulations ensuring that taxpayers fulfill their tax filing obligations and do not evade the law by selling cryptocurrency without reporting the gains," he stated. "It's really that straightforward."
Abolishing the specific tax method for decentralized crypto platforms would decrease U.S. revenue by an estimated $3.9 billion over a decade.
Rep. Jason Smith, the Republican chairman of the committee from Missouri, alleged that the IRS had acted beyond "the letter of the law" when it approved the rule during Biden's final days in office.
"Not only is it unjust, but it's also impractical," he said.
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