H.J.Res.25 - 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
H.J.Res.25 is a joint resolution passed by the House of Representatives aiming to disapprove an IRS rule concerning gross proceeds reporting by brokers involved in digital asset sales. The rule in question (89 Fed. Reg. 106928) mandates that brokers who regularly provide services effectuating digital asset sales must report these proceeds to the IRS.
The resolution seeks to nullify this IRS rule, preventing it from taking effect. This action is taken under chapter 8 of title 5, United States Code, which provides a mechanism for congressional review of agency rulemaking.
The bill was submitted by Mr. Carey on January 21, 2025, and was committed to the Committee of the Whole House on the State of the Union and ordered to be printed on February 28, 2025.
Expected Effects
If enacted, H.J.Res.25 would prevent the IRS from enforcing the rule requiring brokers to report gross proceeds from digital asset sales. This would mean that brokers would not be legally obligated to report these transactions to the IRS.
The immediate effect would be a rollback of regulatory oversight on digital asset transactions. The long-term consequences could include challenges in tax compliance related to digital assets and potential impacts on government revenue.
Potential Benefits
- Reduced compliance burden for brokers dealing with digital assets.
- Potential for increased innovation and investment in the digital asset space due to reduced regulatory overhead.
- Prevents potential overreach by the IRS into the emerging digital asset market.
- Could simplify tax processes for individuals engaged in digital asset transactions.
- May foster a more competitive environment for digital asset businesses.
Most Benefited Areas:
Potential Disadvantages
- Increased difficulty for the IRS in tracking and taxing digital asset transactions, potentially leading to revenue loss.
- Potential for increased tax evasion related to digital assets.
- Reduced transparency in the digital asset market.
- May create an uneven playing field between traditional financial assets and digital assets in terms of tax reporting.
- Could undermine efforts to combat illicit activities involving digital assets.
Most Disadvantaged Areas:
Constitutional Alignment
The resolution is an exercise of Congress's legislative powers as granted by Article I, Section 1 of the Constitution, which vests all legislative powers in the Congress. The Congressional Review Act, under which this resolution is brought, is a mechanism by which Congress can check the power of the executive branch and its agencies, ensuring that regulations align with congressional intent.
Disapproving an agency rule falls within Congress's authority to oversee the implementation of laws and to ensure that agencies do not exceed their delegated powers. The resolution does not appear to infringe on any specific constitutional rights or protections.
However, the long-term effects on tax collection and enforcement could indirectly impact the government's ability to "provide for the common defence" and "promote the general Welfare," as stated in the Preamble, if tax revenues are significantly reduced.
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).