The Association’s letter also referenced the Paperwork Reduction Act.
The letter’s numbers show that the labor constraints and compliance costs are far higher.
This is not the first time the Blockchain Association has voiced its disapproval of the IRS’s proposed broker-dealer regulations. This time, the group is concentrating on the unfair burden that these regulations would place on cryptocurrency businesses, investors, and the IRS.
The Association’s letter referenced the Paperwork Reduction Act, which holds that government agencies cannot impose onerous and needless administrative obligations on persons or organizations engaged in the financial sector.
Labor Constraints and Compliance Cost
The Blockchain Association’s spokespeople said that the new regulations would increase the yearly compliance cost to $254 billion, necessitate the processing of 8 billion 1099-DA tax forms, and waste 4 billion hours of work.
The letter’s numbers show that the labor constraints and compliance costs are far higher than what the IRS had anticipated. They had predicted that the new laws would take 0.15 hours per customer to complete, and that the overall cost of compliance would be $136,350,000.
In addition, the Blockchain Association came to the conclusion that $245 billion in yearly compliance expenditures was totally excessive for a market and asset class that only generate a $10 billion tax deficit at best. In 2023, the Blockchain Association sent a lengthy letter to the IRS outlining several concerns over the proposed broker laws. The letter was 39 pages long.
Some participants in the blockchain ecosystem, such as decentralized financial protocols, would find it difficult, if not impossible, to comply with the new broker reporting regulation from the Internal Revenue Service, according to the industry advocacy group.
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