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Congressional Republicans are working to reverse new IRS guidelines that require so-called “custodial brokers” to report transactions.
Rep. Mike Carey and Sen. Ted Cruz this week introduced corresponding resolutions seeking to “roll back the disastrous IRS broker rule.”
The legislation comes weeks after a group of crypto lobbying firms sued the IRS over the rule. They claim the requirement “exceeds the agencies’ statutory authority, violates the Administrative Procedure Act (“APA”) and is unconstitutional.”
As it currently stands, starting in 2025, custodial brokers are required to report gross proceeds. In 2026, they will have to report cost basis for certain transactions.
The final version of the 1099-DA form was published at the end of last year. While earlier drafts had included a section where brokers had to identify their “type” of business, the final form nixed this box. It’s a small change, but by cutting this section the IRS more or less punted the issue of DeFi actors.
Even so, those opposed to the rule claim that the rule still imposes unfair reporting obligations on intermediaries and other actors in the crypto space.
The resolutions have some co-sponsors (Sens. Cynthia Lummis and Tim Sheehy, to name a few), but neither have been scheduled for a markup or vote just yet. This is a hot-button issue in the crypto space though, so we’d expect companies to be directing a significant amount of their lobbying efforts here.
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