S.jres3 - Providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by the Internal Revenue Service relating to Gross Proceeds Reporting by Brokers That Regularly Provide Services Effectuating Digital Asset Sales. (119th Congress)
Summary
This joint resolution disapproves a rule submitted by the Internal Revenue Service (IRS) concerning gross proceeds reporting by brokers who regularly provide services effectuating digital asset sales. The rule, published in the Federal Register on December 30, 2024, mandates that brokers report gross proceeds from digital asset sales to the IRS. The resolution seeks to nullify this rule, preventing it from taking effect.
The resolution leverages Chapter 8 of Title 5 of the United States Code, which provides a mechanism for Congress to review and disapprove agency rules. This action reflects congressional oversight of executive branch agencies and their regulatory actions.
The resolution was passed by the Senate on March 4, 2025, indicating bipartisan or at least sufficient support within the Senate to proceed with disapproving the IRS rule.
Expected Effects
If enacted, this resolution would prevent the IRS rule on gross proceeds reporting for digital asset sales from taking effect. This means that brokers facilitating digital asset sales would not be required to report these transactions to the IRS under the specific rule outlined in the resolution.
The lack of reporting requirements could impact the IRS's ability to track and tax capital gains from digital asset transactions. It could also lead to continued uncertainty for brokers in the digital asset space regarding their reporting obligations.
Ultimately, the effect depends on whether the House also passes the resolution and whether the President signs it into law or if Congress overrides a potential veto.
Potential Benefits
- Reduced compliance burden: Digital asset brokers would avoid the costs and complexities of implementing the new reporting requirements.
- Protection of privacy: Individuals engaging in digital asset transactions might experience greater privacy, as their transaction data would not be automatically reported to the IRS.
- Innovation in digital assets: Reduced regulatory burden could foster innovation and growth in the digital asset industry.
- Avoidance of potentially flawed regulations: If the congressional assessment is that the rule is poorly written or overly broad, disapproval avoids its negative consequences.
- Reinforces Congressional Authority: Affirms Congress's role in checking executive overreach.
Most Benefited Areas:
Potential Disadvantages
- Reduced tax revenue: The IRS might find it more difficult to track and collect taxes on gains from digital asset transactions, potentially leading to revenue loss.
- Increased tax evasion: The lack of reporting requirements could create opportunities for tax evasion in the digital asset space.
- Uncertainty for taxpayers: Without clear reporting rules, taxpayers might face uncertainty regarding their tax obligations related to digital assets.
- Hindered regulatory clarity: Disapproving the rule could delay the establishment of clear regulatory guidelines for the digital asset industry.
- Undermines efforts to combat illicit finance: Reduced transparency could make it harder to detect and prevent the use of digital assets for illegal activities.
Most Disadvantaged Areas:
Constitutional Alignment
This resolution aligns with the principle of congressional oversight of the executive branch, as established in Article I, Section 1 of the Constitution, which vests all legislative powers in Congress. Chapter 8 of Title 5, United States Code, provides a specific mechanism for Congress to review and disapprove agency rules, reinforcing this oversight function.
The resolution does not appear to infringe upon any specific constitutional rights or liberties. It is a procedural action aimed at preventing a specific agency rule from taking effect. The constitutionality of the underlying rule itself is not directly addressed by this resolution, but rather the process by which the rule was created and is being challenged.
By utilizing the Congressional Review Act, the resolution ensures that regulatory actions by the executive branch are subject to legislative scrutiny, upholding the separation of powers and checks and balances inherent in the U.S. constitutional system.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).