AI Tool Lets Bitcoiners Flood IRS with Comments Against New Draconian Surveillance Regime
New tax proposal aims to extend reporting requirements for brokers as well as expand the definition of a broker to include anyone who “knows or is in a position to know the identity of the party that makes the sale and the nature of the transaction." Public comments are accepted until October 30.
- "Based on existing authority as well as changes to the applicable tax law made by the Infrastructure Investment and Jobs Act, these proposed regulations would require brokers, including digital asset trading platforms, digital asset payment processors, and certain digital asset hosted wallets, to file information returns, and furnish payee statements, on dispositions of digital assets effected for customers in certain sale or exchange transactions,' states the summary of the proposal by the IRS and U.S. Treasury.
"If implemented they would, among other things, significantly increase the surveillance state apparatus with respect to crypto, cause the creation of (literally) billions of new 1099s, and increase legal/compliance costs across the board for nearly every crypto business or DeFi protocol," said Rafael Yakobi, Managing Partner at The Crypto Lawyers.
How YOU can help stop this in less than 2 minutes
- Comments can be submitted anon or under a pseudonym.
1. Visit: https://treasuryraid.lexpunk.army
2. Select the issues that matter to you.
3. Draft a letter and review it.
4. Submit your letter as a comment at the treasury website here.
"IRS/Treasury is required to review these submissions to flag and potentially respond to issues that are presented. We have a huge opportunity to raise these issues in a manner that will likely delay the implementation of the rules until, hopefully, more sensible minds come into power and the issues raised are taken seriously," added Yakobi.
Proposal as it relates to Bitcoin
- Broadly expands the definition of a "broker" to include anyone who facilitates the sales/transaction of assets, and thus expands KYC/AML obligations in a way that are broad enough to potentially include block explorers.
- Requires merchants to KYC customers if the merchant swaps the crypto they receive to USD (meaning users could be asked for KYC when paying in BTC, depending upon circumstances out of their control).
- Would create billions of new 1099s, many of them duplicative, which increases the chances that someone is audited or makes a mistake on their taxes. This would increase the total number of 1099s issued in the United States by something like 50%.
- Would potentially extend KYC obligations to multi-sig service providers where currently they are exempted.
For more information on the proposal, check out this quick breakdown by Fenwick or this comprehensive report by PwC.
- Written or electronic comments must be submitted by October 30, 2023. A public hearing on this proposed regulation has been scheduled for November 7, 2023, at 10 a.m. ET.
