Philip L. Liberatore, CPA Comments on the Implication of New Tax Provisions for Digital Assets Industry

2667 458 Tori

LA MIRADA, CA / ACCESSWIRE / October 19, 2021 / Hailed in one media report as “a historic piece of legislation that could reshape American lives for decades,” the Infrastructure Investment and Jobs Act received the stamp of approval from the US Senate on August 10, 2021. The bill, which is expected to go up for consideration in the US House of Representatives in the fall, contains a number of tax provisions intended to raise funds that would support the proposed $1 trillion of investments in transportation networks, water systems, power grids, broadband updates, and environmental remediation, among others. Philip L. Liberatore, CPA, a California-based company specializing in accounting, tax, and financial management services, comments, “So far, most of the attention seems to be focused on a provision that would affect parties transacting in digital assets. The Joint Committee on Taxation estimates that the proposed enforcement could raise $28 billion over the next 10 years, but the new reporting requirements have also drawn criticism, largely on account of the broad definitions of some core concepts.”

Since the launch of Bitcoin in 2009, cryptocurrencies have become one of the most dynamic asset classes, growing into a market currently valued at over $2 trillion. At the same time, all the hype and endorsement from high-profile investors and celebrities have failed to push these digital assets into the mainstream. “It has proved exceedingly difficult to reconcile the decentralized nature of cryptocurrencies with efforts to make them appealing to the wider investing public,” says Philip Liberatore, founder and president of Philip L. Liberatore, CPA. “Given the extreme volatility in this market, the lack of proper regulation has mostly attracted speculative players, keeping the vast majority of investors at bay. The tax provision included in the infrastructure bill may not be to the liking of some, but it could give the digital assets market a much-needed boost while also raising funds for implementing the administration’s economic plan.”

The bill expands the definition of “broker” to include “any person who (for consideration) regularly provides any service responsible for effectuating transfers of digital assets, including any decentralized exchange or peer-to-peer marketplace.” As for “digital asset,” this is defined as “any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology.” Under the new tax provision, cryptocurrency brokers would be required to report all transfers of digital assets to the Internal Revenue Service (IRS) and collect certain identifying information about account holders, transaction amounts, and the purchase and sale price of any digital asset. These requirements mirror the ones applying to traditional brokers, who are obligated to reports all transactions involving stocks, bonds, commodities, and other assets, Philip L. Liberatore, CPA notes.

The new reporting requirements aim to provide the IRS with the necessary information to track and calculate gains from cryptocurrency transactions, thus strengthening enforcement and improving tax collection. They would substantially increase the burden on crypto brokers, with some critics of the bill saying that the provision would threaten their business model and stifle innovation in the digital assets industry. However, many are likely to view the new rules as a step towards removing the regulatory uncertainty that has held back the cryptocurrency market. According to Philip Liberatore, greater clarity and consistent enforcement should instill confidence in all the retail and institutional investors that have so far given this asset class a wide berth, making them active market participants and ultimately benefiting the entire crypto industry.

Based in La Miranda, California, Philip L. Liberatore, CPA has been providing financial advisory support and guidance to customers since 1988, when seasoned CPA and entrepreneur Philip Liberatore launched the business. Focused on personalized customer care and dedicated to compliance with the highest professional standards, Philip L. Liberatore, CPA caters to the needs of companies of all sizes as well as individuals. Offering a comprehensive portfolio of tax and accounting services, the firm prides itself on maximizing outcomes for its clients through prioritizing accuracy, timeliness, consistency, and integrity in its professional dealings.

Philip L. Liberatore, CPA – Financial Advisory Support and Guidance:

Philip L. Liberatore, CPA Discusses IRS Negotiations for Increased Budget and Plan to Ramp Up Hiring:

Contact Information:
Philip Liberatore
Philip L. Liberatore, CPA
16800 Valley View Ave
La Mirada, CA 90638
[email protected]

SOURCE: Philip L. Liberatore, CPA