The Blockchain Association is fighting back against new tax rules proposed by the Internal Revenue Service (IRS), arguing that they’re far too complex and costly to implement.
In a recent letter, the Washington DC-based group that advocates for the crypto industry claims the IRS’s new “broker-dealer” rules violate the Paperwork Reduction Act, which prevents government agencies from creating unnecessarily complicated paperwork.
The Association paints a concerning picture of what could happen if these rules take effect. They estimate it would create 8 billion new tax forms, require 4 billion hours to process, and cost $254 billion annually to comply with the rules.
These figures are significantly higher than the IRS’s initial projections, which estimated about 9 minutes per customer and a total cost of $136 million. The Blockchain Association argues it’s unreasonable to impose such a hefty burden on an industry that, at most, might be underpaying $10 billion in taxes.
In the letter, the Association states: “To require the industry to spend over $250 billion per year to help lower a tax gap that is, at the highest conceivable level, $10 billion per year, is completely unreasonable.”
The Association also criticizes the lack of practical utility of the proposed regulations, pointing out that they would require reporting on trivial transactions and assets like stablecoins, which rarely result in taxable gains or losses.
However, this isn’t the time the association has voiced concerns. Last year, the Blockchain Association submitted a detailed 39-page letter arguing that many entities in the blockchain ecosystem would struggle to comply with the proposed regulations. The crypto space awaits the IRS’s response to the latest objections
Also Read: Consensys Asks IRS to Postpone Crypto Tax Regulation
