How the cryptic tax provisions of the US Infrastructure Act will be unveiled soon.

The US House of Representatives is due to vote on the construction bill later this month.

As the US House of Representatives prepares to vote on the Senate's $ 1,000 billion bipartisan infrastructure bill, tax prosecutors wait for the Federal Treasury Department to release information on the cryptocurrency.

In August, the crypto industry formed a joint venture to change the terms of the general bill. The bill appears to extend the meaning of "worker" beyond cryptocurrency exchange and the like on trading platforms which will include miners, node validators and developers. Other types of laws that do not help consumers do business.

Both parties proposed an amendment to the law, but it was passed by the Senate on August 11 and the House voted unanimously on September 27.

Legal experts have warned that some industry workers will not be able to comply if the law is followed.

For example, according to Nathan Gieselman, partner of Skadden, Arps, Slate, Meagher & Flom LLP, the original version of this statement is dangerous for people who cannot have good consumer information like regular staff. Mandatory warning.

Gieselman said: "They have to stop their job or accept the violation and risk the penalties incurred," Gieselman said.

Written warnings should be "impossible," said Alex Muresianu and Garrett Watson, legal advisers to the Tax Foundation, an independent tax authority.

However, earlier this month it was announced that the Strategy and Finance Department was planning to clarify the terms of "broker". A finance official who requested anonymity in a Bloomberg report said the bank would follow the IRC's definition of “employee” rather than focusing on organizations outside of Finance. to the right. The IRC defines "employee" as "(A) the reseller, (B) the merchant, (C) the other person (as defined) who normally acts as an intermediary for the goods. goods or services, "but does not include" people. "" These are farm management activities on behalf of others.

The outlook for the market will soon depend on the Treasury's personal conclusions on this note, but some U.S. tax lawyers are skeptical that the Treasury will continue to lower its earnings under the broker's terms unless the bill itself is changed. .

David Zaslowsky, partner at Baker & McKenzie and editor of the firm's blockchain legal blog, said: “That's good news, but I'm not sure what they are saying.

We never know ...

Earlier this year, Zaslowsky wrote a report on how the US Internal Revenue Service (IRS) "must take action" to tax crypto-transactions in order to increase tax revenue. According to Zaslowsky, the purpose of the IRS is to educate taxpayers by asking a question about the crypto industry.

The new rules are expected to raise $ 28 billion over 10 years, so the IRS's goal of increasing income and preventing tax exemption remains the same.

“The finance ministry's point of view is that not everyone should report,” Zaslovsky said.

Gieselman added that the proposed legislation would require the cryptocurrency exchange to continue reporting 1,099 non-performing transactions, and it was not clear how many markets were affected. is now declared according to law, Gieselman added.

Zaslowsky said the turmoil, however, was not because the platforms and market exchanges were not advertised properly and new information would need to be in place, but because the content has widely arrested companies such as miners who did not see the file. He added that by using something similar to the broker's current content, the first would be shut down and the second would not, which would increase the bank's revenue.

“But did it really happen? Are you worried? Aren't you? You never know,” Zaslovsky said.

What about NFT and DeFi?

In fact, Gieselman predicts that cryptocurrency exchanges will become the focus of new issuance.

CoinTracker's Director of Tax Advice Shehan Chandrasekera agrees.

Chandrasekera said, "I believe the Treasury Department will maintain strict regulations in the cryptocurrency market. This includes exchanges such as Coinbase, and there may be exchanges such as Uniswap."

The warning should be used for trading, but Gieselman said the management of who passes through these markets remains unclear.

"Will this keep companies that decide to issue their own stablecoins, offer their own cryptocurrencies, their own [non-fungible tokens] and sell them on the market?" said Gisselman.

Erin Fennimore, director of global intelligence expertise at TaxBit, the crypto-tax software, said that under the current legal framework, NFTs and Financial Management (DeFi) will be considered a "broker". Joe Guagliardo, technology and blockchain partner of Troutman Pepper, agrees with Fennimore that including NFTs in the context is not a problem.

police

The law, currently drafted, will not apply until after 2023.

“So this is all happening. But the question comes back to the fact that it's broad enough to include parts that don't need information to show because of their actions. work, then there are problems. Zaslowsky said.

Gieselman believes that the administration of this law will be similar to that of the Foreign Taxation Act (FATCA), which came into effect in 2010. FATCA aims to protect the tax exemption of Americans who keep assets and bank accounts abroad. , and requires foreign financial companies' assets to be reported to the IRS.

But FATCA's first requirement is poor, and everyone thinks there's a problem here and there's no data to fix, says Gieselman.

“In the real world, it can take years to get exactly what [the FATCA rules] are written to put them in place. And there are a few key points from the statement. said Gieselman.

According to Gieselman, if the bill goes into effect, the Treasury can move to one or two terms in fiscally encrypted form. In one case, the Treasury Department can issue compliance instructions (without legislation until finalized) and make public comments. The Treasury Department may review the information received and modify or clarify the terms stated before the final announcement of the policy.

In other cases, the Treasury Department may declare the law and the interim law (usually the same). However, in this case, the provision was temporarily legal immediately, explains Gieselman. Thereafter, there will be an opportunity for comment, and the final policy will be announced in the revised form.

Given the request for 2023, Gieselman said both sides could see the first submission, depending on how long it takes the Treasury to prepare the information.

"If at the end of 2022 we can use the second option (so that the interim rules take effect when the law goes into effect), and we can bring in the stated rules as early as 2022, then we are old-fashioned," Gisell Mann stated in an e-mail.

In another case, Gieselman said, the Treasury could take a similar approach to some of the provisions of the 2017 Code of Conduct and Labor, which aims to reduce taxes for businesses and individuals. The Treasury Department may issue notices outlining certain key rules that must be included when the rules are promulgated, and may allow taxpayers to rely on those rules to do so before they become the end.

"If there is a willingness, for example, to limit the limits of what is considered poor, it can be done more by warning and all strategic direction will go slower," Gieselman said.

Regardless of how the bank defines the term “employee,” Fennimore said the change would not happen.

"It's a change, but it's not 'impossible'." This includes the use of procedures, procedures and procedures to facilitate the collection of the information necessary for the publication to the IRS. The best advice is to start planning as soon as possible, Finnemore said.