Scarinci Hollenbeck, LLC, LLCScarinci Hollenbeck, LLC, LLC

Firm Insights

How Will the Infrastructure Bill Impact Cryptocurrency?

Author: Scarinci Hollenbeck, LLC

Date: September 3, 2021

Key Contacts

Back
How Will the Infrastructure Bill Impact Cryptocurrency?

Congress is hoping that tax revenue from cryptocurrency transactions will help fund infrastructure projects across the country...

Congress is hoping that tax revenue from cryptocurrency transactions will help fund infrastructure projects across the country. Under a controversial provision in the $1 trillion infrastructure bill approved by the U.S. Senate, cryptocurrency brokers will be subject to new tax-reporting requirements.

Increasing Oversight Over Cryptocurrency

As discussed in prior posts, the federal government is steadily increasing its oversight over cryptocurrency as it grows in popularity. The Internal Revenue Service (IRS) has led the charge, seeking to increase tax compliance around cryptocurrency transactions. In 2019, the IRS began sending letters to taxpayers with virtual currency transactions that potentially failed to report income and pay the resulting tax from virtual currency transactions or did not report their transactions properly.

In 2020, the IRS added a new section to Form 1040 that asks taxpayers to report capital gains and losses from crypto transactions. Earlier this year, the U.S. Department of Treasury released a report outlining the Biden Administration’s proposed tax compliance measures, which includes the requirement that crypto transactions exceeding $10,000 be reported to the IRS.

Cryptocurrency Provisions in Infrastructure Bill

The Infrastructure Investment and Jobs Act (H.R. 3684) seeks to increase the reporting of cryptocurrency transactions to the Internal Revenue Service (IRS), a move that is projected to raise $27.9 billion over the next ten years. The bill would specifically require cryptocurrency “brokers” to collect certain information from cryptocurrency account owners, such as their names, addresses, and tax identification numbers. Brokers would also be required to provide certain information to the IRS regarding a client’s sale of cryptocurrency, including identifying information about the seller and the amount recognized from the sale.

The proposed legislation is generating controversy because it expands the definition of “broker” under the U.S. Tax Code to include “any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person.” While the definition is intended to capture cryptocurrency exchanges and other entities that facilitate cryptocurrency sales or transfers, the cryptocurrency industry has raised concerns that the broad definition will also sweep up cryptocurrency miners, software developers, and others who don’t have visibility to buyers and sellers.

While several amendments were proposed in the Senate, lawmakers were unable to reach a consensus on substitute language. As a result, the Infrastructure Investment and Jobs Act passed with the controversial cryptocurrency provision intact.

What’s Next?

The infrastructure bill’s cryptocurrency provisions are not yet set in stone and may still be amended before a final House vote. Sen. Mark Warner also raised the prospect of amending the provisions via a standalone bill.

Should those efforts be unsuccessful, the U.S. Treasury will still have the opportunity to clarify the reporting requirements when enacting implementing regulations. As currently written, the new requirement wouldn’t take effect until 2024, which leaves a lot of time to solicit feedback and fine-tune the “broker” definition.

If you have questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, Teddy Eynon, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Scarinci Hollenbeck, LLC, LLC

Related Posts

See all
Common Causes of Partnership Disputes and How to Resolve Them post image

Common Causes of Partnership Disputes and How to Resolve Them

Business partnerships, much like marriages, function exceptionally well when partners are aligned but can become challenging when disagreements arise. Partnership disputes often stem from conflicts over business strategy, financial management, and unclear role definitions among partners. Understanding Business Partnership Conflicts Partnership conflicts place significant stress on businesses, making proactive measures essential. Partnerships should establish detailed […]

Author: Christopher D. Warren

Link to post with title - "Common Causes of Partnership Disputes and How to Resolve Them"
President Trump's Termination of Member Gwynne Wilcox post image

President Trump's Termination of Member Gwynne Wilcox

On January 28, 2025, the Trump Administration terminated Gwynne Wilcox from her position as a Member of the National Labor Relations Board (NLRB or the Board). Gwynne Wilcox, a union side lawyer for Levy Ratner, was confirmed to the Board for an original term in 2021 and confirmed again for a successive five-year term expiring […]

Author: Matthew F. Mimnaugh

Link to post with title - "President Trump's Termination of Member Gwynne Wilcox"
How to Dissolve a Corporation in New Jersey: A Step-by-Step Guide post image

How to Dissolve a Corporation in New Jersey: A Step-by-Step Guide

Closing your business can be a difficult and challenging task. For corporations, the process includes formal approval of the dissolution, winding up operations, resolving tax liabilities, and filing all required paperwork. Whether you need to understand how to dissolve a corporation in New York or New Jersey, it’s imperative to take all of the proper […]

Author: Christopher D. Warren

Link to post with title - "How to Dissolve a Corporation in New Jersey: A Step-by-Step Guide"
Gross Lease vs. Net Lease: Understanding the Key Differences post image

Gross Lease vs. Net Lease: Understanding the Key Differences

Commercial leases can take a variety of forms, which is often confusing for both landlords and tenants. Understanding the different types, especially the gross lease structure, is important when selecting the lease that best suits your needs. One key distinction between lease types is how rent is calculated and paid. This article addresses the two […]

Author: Robert L. Baker, Jr.

Link to post with title - "Gross Lease vs. Net Lease: Understanding the Key Differences"

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Sign up to get the latest from our attorneys!

Explore What Matters Most to You.

Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.

Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.

Let`s get in touch!

* The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!