The Infrastructure Investment and Jobs Act (IIJA), which President Biden signed into law in Nov. 2021, introduces two new reporting requirements for individuals and businesses that conduct transactions using digital assets. House Majority Whip Tom Emmer (R-MN) said he believes the new reporting requirements, which will take effect for tax returns filed after Dec. 31 of this year, will push digital asset innovation out of the U.S. and into other countries. Emmer and Rep. Patrick McHenry (NC-10) have reintroduced a bill that would clarify the wording of the IIJA in an effort to not push digital asset entrepreneurs out of the U.S.
“The nonsensical digital asset reporting requirements included in the Infrastructure Investment and Jobs Act of 2021 will send crypto innovation and opportunities oversees, leaving the United States far behind in the global race to lead in the next phase of the digital economy,” Emmer said, according to a press release. “I’m proud to continue to support Chair McHenry as a cosponsor of the Keep Innovation in America Act to clarify the U.S. Tax Code’s definition of ‘Broker’ so the future of the digital asset ecosystem reflects American values.”
“America can either cement our position as the leader of the global financial system, or we can allow this wave of innovation to pass us by,” McHenry said, according to the press release. “The digital asset ecosystem holds tremendous potential to bring more Americans into our financial system and serve as the building blocks of the next generation of the internet. Unfortunately, misguided policy and regulatory overreach threaten to push this dynamic industry—and its potential benefits—overseas. The Keep Innovation in America Act will fix the poorly constructed digital asset reporting requirements included in the Infrastructure Investment and Jobs Act. I’m proud to lead this bipartisan legislation to provide desperately needed clarity for innovators and entrepreneurs.”
The lawmakers said that the IIJA includes language that raises privacy concerns and could potentially have a long-lasting, negative impact on the digital asset ecosystem in the U.S., according to a summary of the new bill, titled the "Keep Innovation in America Act." The bill summary highlights several issues with the IIJA, including the fact that it expands the definition of "brokers" for the purposes of tax reporting, but the bill's sponsors believe that people such as miners and software developers should not be categorized as "brokers." The IIJA also expands the definition of "cash" so that it now includes "any digital asset," and it gives the Department of Treasury broad authority to amend the definition of "digital asset."
The chairman and vice chairman of the Digital Assets, Financial Technology and Inclusion Subcommittee have both voiced support for the Keep Innovation in America Act.
“I am glad to support Chairman McHenry’s Keep Innovation in America Act to fix the definition of a ‘broker’ in the Infrastructure Investment and Jobs Act,” Chairman French Hill (AR-02) said, according to the press release. “Treasury should not apply these digital asset tax reporting requirements on entities like miners, validators, and developers that don’t have access to customer information.”
“The Keep Innovation in America Act is vital for repairing the unworkable language that Congress passed in the Infrastructure Investment and Jobs Act,” Vice Chairman Warren Davidson (OH-08) said, according to the press release. “Providing this clarity formally welcomes innovation and progress within the fintech space.”
