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 and received in the Senate, seeking congressional disapproval of an IRS rule concerning gross proceeds reporting by brokers involved in digital asset sales. The resolution specifically targets the rule outlined in the Federal Register (89 Fed. Reg. 106928) from December 30, 2024. The goal is to nullify the rule, preventing it from taking effect.
This action utilizes the Congressional Review Act, allowing Congress to overrule agency regulations. The resolution reflects concerns about the IRS rule's impact on the digital asset market and related financial activities.
If passed by the Senate, the resolution would effectively block the IRS from implementing the new reporting requirements for digital asset brokers.
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 means that the existing reporting requirements, or lack thereof, would remain in place.
The immediate effect would be to maintain the status quo regarding tax reporting for digital asset transactions. This could lead to continued uncertainty and potential tax avoidance in the digital asset space.
Ultimately, the resolution's success would shift the focus back to Congress to potentially legislate a more tailored approach to digital asset taxation.
Potential Benefits
- Prevents potential overreach by the IRS in regulating the digital asset market.
- Allows Congress to have more direct control over the regulation of digital assets.
- May reduce compliance costs for brokers who would have been subject to the new IRS rule.
- Could foster innovation in the digital asset space by avoiding potentially burdensome regulations.
- Addresses concerns about the clarity and scope of the IRS rule.
Most Benefited Areas:
Potential Disadvantages
- May lead to continued tax avoidance in the digital asset market due to lack of clear reporting requirements.
- Could hinder the IRS's ability to effectively monitor and regulate digital asset transactions.
- Creates uncertainty for brokers and investors in the digital asset space.
- May delay the development of a comprehensive regulatory framework for digital assets.
- Could be perceived as favoring the digital asset industry over the interests of taxpayers.
Most Disadvantaged Areas:
Constitutional Alignment
This resolution aligns with the principle of congressional oversight of executive agencies, as established through the Congressional Review Act, which is itself derived from Congress's legislative powers granted by Article I, Section 1 of the Constitution. It allows Congress to check the power of the IRS, an executive branch agency, and ensure that regulations are consistent with congressional intent.
The resolution also implicates the power to tax and regulate commerce, both of which are enumerated powers of Congress under Article I, Section 8. By disapproving the IRS rule, Congress is asserting its authority over how digital assets are taxed and regulated, influencing the scope and application of these constitutional powers.
However, the resolution does not directly infringe upon individual rights or liberties protected by the Bill of Rights. Its primary focus is on the balance of power between the legislative and executive branches and the regulation of economic activity.
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).