- IRS rules could create 8 billion tax forms annually.
- Compliance could cost $254 billion versus IRS estimates of $136.35 million.
- Crypto industry sees rules as unrealistic and excessive.
The Blockchain Association has raised concerns over the IRS’s proposed broker rule, emphasizing the significant administrative and financial burden it could place on the cryptocurrency sector. They argue that the requirements are overly demanding and not aligned with the realities of digital finance management.
The advocacy group also points to the Paperwork Reduction Act, emphasizing that the proposed requirements go far beyond reasonable measures.
Concerns Over Compliance Costs
According to the Blockchain Association, the IRS’s new rule could generate an overwhelming 8 billion 1099-DA tax forms annually. The labor required to process these forms is estimated at 4 billion hours, with compliance costs potentially reaching $254 billion yearly.
Such figures starkly contrast with the IRS’s initial estimates, which suggested the regulations would require only 0.15 hours per customer, at a total cost of around $136.35 million.
The Association believes these requirements are disproportionate to the tax gap they aim to address, which stands at approximately $10 billion. Their contention highlights a mismatch between the perceived risks and the operational strain imposed on stakeholders within the crypto market.
Industry Backlash
The proposed rules have not been very well received in the crypto community and there are several reasons for that. Some people think that the IRS has some major misconceptions regarding the cryptocurrencies and the decentralised finance. This has culminated to what many regard as unrealistic and excessive rules which may hinder flexibility in activities within the blockchain subsector.
The executive director at Coin Center, Jerry Brito has explained that these requirements are almost impossible to implement especially within the decentralized platforms. The implementation problems together with the high costs of compliance have cast doubts on the viability of these measures.
Moreover, this isn’t the first time the Blockchain Association has taken a stand against IRS regulations. The group submitted a detailed 39-page document last year, outlining various objections to the IRS’s approach, reinforcing the industry’s stance against what it views as regulatory overreach.
These ongoing objections by major industry players underscore the tension between regulatory bodies and the rapidly evolving blockchain sector.
Read Also:
disclaimer read moreCrypto News Land, also abbreviated as "CNL", is an independent media entity - we are not affiliated with any company in the blockchain and cryptocurrency industry. We aim to provide fresh and relevant content that will help build up the crypto space since we believe in its potential to impact the world for the better. All of our news sources are credible and accurate as we know it, although we do not make any warranty as to the validity of their statements as well as their motive behind it. While we make sure to double-check the veracity of information from our sources, we do not make any assurances as to the timeliness and completeness of any information in our website as provided by our sources. Moreover, we disclaim any information on our website as investment or financial advice. We encourage all visitors to do your own research and consult with an expert in the relevant subject before making any investment or trading decision.
