Bill Overview
Title: A bill to revise the definition of a broker for purposes of certain reporting requirements with respect to digital asset transfers under the Internal Revenue Code of 1986, and for other purposes.
Description: This bill excludes certain persons from being considered a broker for tax reporting purposes. Under current law, the transfer of digital assets from a broker to a nonbroker requires the broker to file a return beginning on January 1, 2024. The bill provides that a broker does not include any person solely engaged in the business of (1) validating distributed ledger transactions, or (2) selling hardware or software for which the sole function is to permit access to digital assets on a distributed ledger.
Sponsors: Sen. Toomey, Patrick [R-PA]
Target Audience
Population: People involved in the digital asset industry
Estimated Size: 1500000
- The bill impacts individuals and businesses involved in digital asset transactions as it changes the tax reporting requirements for brokers.
- Individuals who are validating distributed ledger transactions will not be considered brokers, potentially reducing their tax reporting obligations.
- Businesses selling hardware or software solely for the purpose of accessing digital assets will be excluded from being classified as brokers, which will affect their reporting responsibilities.
- Global brokerage services dealing with digital assets will be influenced as the definition of a broker under US law is important for international compliance.
Reasoning
- The policy is likely to impact those involved in digital asset transactions and blockchain technology, particularly those in validation and hardware/software sales for access purposes.
- While the policy changes tax reporting obligations, it does not introduce direct financial benefits or costs associated with implementation.
- Interviews should represent a variety of stakeholders across gender, age, occupation, and involvement level in the digital asset industry to cover the breadth of impact.
- The potential impact on individual wellbeing arises from reduced administrative burdens and associated stress, rather than direct financial impact, as the policy does not change financial earnings.
- Some individuals may not experience any change in their wellbeing as the policy doesn't directly address factors such as income or job security.
- The commonness score reflects the prevalence of similar profiles within the digital asset industry involvement, ensuring diverse representation.
Simulated Interviews
Software Developer (San Francisco, CA)
Age: 35 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 8/20
Statement of Opinion:
- This policy helps reduce unnecessary paperwork for developers like me.
- It lets us focus more on innovation rather than tax compliance.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 6 |
| Year 20 | 7 | 6 |
Cryptocurrency Trader (Austin, TX)
Age: 29 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 2.0 years
Commonness: 10/20
Statement of Opinion:
- While I am primarily a trader, knowing that certain validations aren't reported eases long-term concerns.
- It's a positive change for the industry overall.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 5 |
Blockchain Consultant (New York, NY)
Age: 42 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 10.0 years
Commonness: 5/20
Statement of Opinion:
- This aligns with efficient blockchain operation.
- My clients are relieved and happier with simpler policies.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 9 | 8 |
| Year 3 | 9 | 8 |
| Year 5 | 9 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 6 |
Hardware Sales Manager (Seattle, WA)
Age: 24 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 0.0 years
Commonness: 12/20
Statement of Opinion:
- This doesn't alter my day-to-day work much.
- The policy is more relevant to bigger companies we supply to.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 5 | 5 |
| Year 5 | 5 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 5 | 5 |
Entrepreneur (Miami, FL)
Age: 55 | Gender: male
Wellbeing Before Policy: 9
Duration of Impact: 3.0 years
Commonness: 6/20
Statement of Opinion:
- Direct influence may be minimal for me, but it aids the smoother operation of blockchain activities.
- Investors and partners are more at ease.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 9 | 9 |
| Year 2 | 9 | 9 |
| Year 3 | 9 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 8 | 7 |
| Year 20 | 7 | 6 |
Digital Asset Educator (Boston, MA)
Age: 38 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 7/20
Statement of Opinion:
- The policy simplifies tax education significantly.
- I can now focus more on innovation in my courses.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 7 | 6 |
Freelance Writer on Blockchain (Denver, CO)
Age: 31 | Gender: other
Wellbeing Before Policy: 6
Duration of Impact: 2.0 years
Commonness: 9/20
Statement of Opinion:
- This gives me more content on positive regulatory moves.
- It's a step toward wider acceptance and understanding.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 5 |
Tax Consultant (Los Angeles, CA)
Age: 46 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 10.0 years
Commonness: 4/20
Statement of Opinion:
- Policy simplifies advice I have to give clients.
- It also reduces the volume of complex consultations.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 9 | 8 |
| Year 2 | 9 | 8 |
| Year 3 | 9 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 6 |
Fintech Startup Founder (Chicago, IL)
Age: 39 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 6/20
Statement of Opinion:
- A well-received policy providing breathing room from compliance issues.
- This allows me to focus on scaling my business.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 6 | 5 |
Blockchain Enthusiast (Portland, OR)
Age: 27 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 3.0 years
Commonness: 11/20
Statement of Opinion:
- This policy reassures those of us wary of entering the market due to complex compliance.
- Even small-time enthusiasts can thrive.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 5 | 4 |
Cost Estimates
Year 1: $0 (Low: $0, High: $0)
Year 2: $0 (Low: $0, High: $0)
Year 3: $0 (Low: $0, High: $0)
Year 5: $0 (Low: $0, High: $0)
Year 10: $0 (Low: $0, High: $0)
Year 100: $0 (Low: $0, High: $0)
Key Considerations
- Impacted entities are primarily from the digital asset industry, including blockchain technology validators and software/hardware vendors.
- Federal tax revenue impact is minimal as the policy doesn’t create or prevent substantial taxable income.
- The cost savings for individuals and small-scale businesses could potentially foster some sectoral reinvestment.
- The bill formalizes existing practices for some digital asset operations, reducing uncertainty.