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White House says crypto tax enforcement will help pay for bipartisan infrastructure deal

A months-in-the-making infrastructure bill in the U.S. Senate will be partially paid for by enhanced tax enforcement of cryptocurrency, the White House said Wednesday.

Though the text of the legislation — said to be struck Wednesday after a long period of at-times acrimonious negotiations between Democrats and Republicans on Capitol Hill — is not publicly available, a White House fact sheet mentions crypto tax enforcement as one of the spending offsets to help finance the multi-billion dollar infrastructure project.

The fact sheet notes:

“In the years ahead, the deal will generate significant economic benefits. It is financed through a combination of redirecting unspent emergency relief funds, targeted corporate user fees, strengthening tax enforcement when it comes to crypto currencies, and other bipartisan measures, in addition to the revenue generated from higher economic growth as a result of the investments.”

CoinDesk reported Wednesday that a separate fact sheet it reviewed said that the bill would raise some $28 billion from heightened reporting requirements for exchanges and brokerages, though it wasn’t immediately clear across what length of time that amount of money would be garnered.

According to documentation obtained by The Block, the deal’s crypto elements are described as the following:

“The bipartisan infrastructure framework applies information reporting requirements to digital assets (including cryptocurrency) to ensure they are properly reported to the IRS. The provision includes updating the definition of broker to reflect the realities of how digital assets are acquired and traded. The provision further makes clear that broker-to-broker reporting applies to all transfers of covered securities within the meaning of section 6045(g)(3), including digital assets.

Additionally, digital assets are added to the current rules requiring businesses to report cash payments over $10,000.”

The documentation shared with The Block also included the $28 billion figure, which appears to be an estimate from the Joint Committee on Taxation or JCT. 

News reports indicate that a test vote of the deal will take place in the Senate sometime Wednesday. However, given the fluid nature of the negotiations and divisions between GOP and Democrat negotiators of the deal and the 50-50 split of the Senate, a successful vote is not guaranteed, nor will any final provisions be known until the text is formally introduced.

For example, Republican senators have pushed back against the inclusion the enhanced IRS enforcement in the bipartisan bill, though it appears that the existing draft retains the crypto-specific provisions. Former President Donald Trump has also urged Republicans in the Senate to reject the deal.

If and when the Senate passes a bill, it must then be harmonized with legislation out of the Democrat-controlled House of Representatives. 

This is a developing story and will be updated.

Frank Chaparro contributed reporting.