WASHINGTON, D.C. – As a part of ongoing efforts to undo the harmful policies imposed by the Biden Administration, the Ways and Means Committee approved the repeal of a last-minute cryptocurrency rule. The so-called “DeFi Broker Rule” runs afoul of congressional intent in a way that would cripple American digital asset leadership, stifle innovation, and burden American entrepreneurs. The rule would devastate America’s decentralized finance industry by requiring providers to collect burdensome paperwork – including sensitive taxpayer information – that digital wallet providers are currently unable to provide. For the millions of Americans who buy or sell cryptocurrency, the rule invades their privacy and restricts the freedom and innovation of digital assets. 

A former IRS commissioner even warned the rule would “overwhelm the agency and have little to no value to effective and efficient tax administration.” By the IRS’s own estimate, the rule would produce at least 8 billion new pieces of paperwork for taxpayers to submit to the agency and for IRS employees to collect and analyze. The Committee disapproved of the rule under authorities provided to Congress through the Congressional Review Act.

Ways and Means Committee Chairman Jason Smith (MO-08) noted at the start of the Committee’s consideration of the joint resolution that the Biden Administration significantly overstepped its boundaries at the cost of American technological leadership and cryptocurrency holders:  

“The IRS stretched its directives from Congress in the 2021 infrastructure law to enact a cryptocurrency agenda and unnecessarily regulate the providers of digital wallets. The winners of this last-minute rule are foreign digital asset companies who are exempt from the burdensome requirements. The losers are the roughly 1 in 4 Americans who own cryptocurrency.

“Not only is it unfair, but it’s unworkable. DeFi brokers do not even collect the information from users needed to implement this rule.”

The Committee also approved two bipartisan pieces of legislation that ease the burden of tax filing for taxpayers living in areas of natural disasters. The reforms give victims of natural disasters additional time to claim a refund in the same way that those who request a filing extension receive additional time, while also ensuring that the automatic IRS payment deadline is extended to match any disaster-based filing deadline extension. The reforms also allow the Treasury Secretary, after consulting with FEMA, to extend relief to taxpayers impacted by natural disasters and emergencies, as soon as the governor of a state declares a disaster or state of emergency.

The two bipartisan bills build on the Committee’s work to provide common sense improvements and relief for taxpayers. Earlier this month, the Committee passed similar legislation providing fair treatment for digital tax returns and payments, requiring the IRS to explain to taxpayers any reassessment due to alleged math errors, and protecting the independence of the National Taxpayer Advocate from the IRS. Last Congress, Ways and Means-approved legislation, the Federal Disaster Tax Relief Act that provides tax relief to natural disaster victims, became law. 

H.J.R. 25 – Disapproving of Biden IRS “DeFi Broker Rule”
Disapproves, under the Congressional Review Act, of a last-minute Biden Administration regulation that expands federal reporting requirements for those involved in decentralized digital asset transactions. 

• In December 2024, the Biden Administration released a new rule requiring decentralized finance (DeFi) brokers to file a Form 1099 and subject DeFi brokers to the same reporting rules as brokers for securities and operators of custodial digital asset trading platforms.
• Unlike securities brokers or centralized brokers of custodial digital assets – which operate more like banks – DeFi brokers are not centralized, do not collect the information needed to implement this rule, and are not the same as traditional securities brokers. 
• The joint resolution would disapprove of and effectively repeal the rule submitted by the IRS relating to “Gross Proceeds Reporting by Brokers That Regularly Provide Services Effectuating Digital Asset Sales.” 
• The joint resolution would also wipe the slate clean for Congress to enact the Trump Administration’s desired policy related to DeFi brokers.

Click here for a fact sheet on the bill. 

The bill passed the Committee 26-16. 

H.R. 1491 – Disaster Related Extension of Deadlines Act
Implements two tax filing reforms for taxpayers living in areas affected by natural disasters. Conforms the deadline for taxpayers to claim a credit or refund for a previous tax year to the IRS deadline to pay the credit and stops the IRS practice of prematurely mailing notices demanding tax payment. 

• The IRS often postpones the filing and payment deadline for taxpayers affected by federally declared disasters. Often, the three-year window for taxpayers to claim a credit or refund for a previous tax year is not also similarly extended. Taxpayers affected by natural disasters are left with less time to claim a credit or refund than taxpayers who requested a filing postponement. 
• The bill extends the three-year window for receiving a refund or credit when the IRS extends the filing deadline due to a natural disaster and ensures the automatic IRS payment deadline is extended to match any disaster-based filing deadline extension. 

Click here for a fact sheet on the bill. 

The bill passed the Committee 44-0.

H.R. 517 – Filing Relief for Natural Disasters Act
Authorizes the Treasury Secretary, in consultation with FEMA, to postpone tax deadlines for Americans in state-declared disaster areas that have not yet received a federal disaster declaration. 

• The IRS currently has the authority to postpone tax filing deadlines for taxpayers impacted by federally declared disasters.
  • However, it may take days or even weeks for the federal government to issue a federal major disaster declaration. 
• This bill authorizes the Treasury Secretary, after consulting with the Federal Emergency Management Agency, to postpone tax filing deadlines to taxpayers impacted by natural disasters and emergencies, as soon as the governor of a state declares a disaster or state of emergency. 
• Additionally, this bill expands the current mandatory extension following a federally declared disaster declaration from 60 to 120 days. 

Click here for a fact sheet on the bill. 

The bill passed the Committee 42-0.