Keep Innovation in America Act

Subjects: Taxation

Summary:  <p><strong>Keep Innovation in America Act</strong></p> <p>This bill modifies provisions enacted by the Infrastructure Investment and Jobs Act relating to the definitions of broker and digital assets and their reporting requirements. </p> <p>The bill redefines<em> broker</em>, for tax reporting purposes, to mean any person who (for consideration) stands ready in the ordinary course of business to effect sales of digital assets at the direction of their customers. </p> <p>The bill redefines <em>digital asset</em> to mean any digital representation of value which is recorded on a cryptographically secured distribution ledger (this revised definition eliminates the discretion of the Department of the Treasury to include <em>similar technology</em> in the definition of digital asset). </p> <p>The bill eliminates the cash reporting requirement for digital assets (i.e., receipt of more than $10,000) but requires Treasury, in consultation with the Financial Crimes Enforcement Network and other representatives of the digital asset industry, to conduct a study of, and report on, the effect of expanding the definition of cash to include any digital asset.</p>

<html><body><pre>[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1414 Introduced in House (IH)]

&lt;DOC&gt;






118th CONGRESS
  1st Session
                                H. R. 1414

To amend the Internal Revenue Code of 1986 to clarify the definition of 
                    broker, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 7, 2023

  Mr. McHenry (for himself, Mr. Torres of New York, Mr. Davidson, Mr. 
  Khanna, Mr. Emmer, Mr. Swalwell, Mr. Schweikert, Mr. Soto, and Mr. 
    Hill) introduced the following bill; which was referred to the 
   Committee on Ways and Means, and in addition to the Committee on 
 Financial Services, for a period to be subsequently determined by the 
  Speaker, in each case for consideration of such provisions as fall 
           within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to clarify the definition of 
                    broker, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Keep Innovation in America Act''.

SEC. 2. CLARIFICATION OF DEFINITION OF BROKER.

    (a) In General.--Section 6045(c)(1)(D) of the Internal Revenue Code 
of 1986 is amended to read as follows:
                    ``(D) any person who (for consideration) stands 
                ready in the ordinary course of a trade or business to 
                effect sales of digital assets at the direction of 
                their customers.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to returns required to be filed and statements required to be furnished 
after December 31, 2025.

SEC. 3. REPORTING OF DIGITAL ASSETS.

    (a) Brokers.--
            (1) Definition of digital asset.--Section 6045(g)(3)(D) of 
        the Internal Revenue Code of 1986 is amended to read as 
        follows:
                    ``(D) Digital asset.--The term `digital asset' 
                means any digital representation of value which is 
                recorded on a cryptographically secured distributed 
                ledger.''.
            (2) Applicable date.--Section 6045(g)(3)(C)(iii) of such 
        Code is amended to read as follows:
                            ``(iii) January 1, 2025, in the case of any 
                        specified security which is a digital asset, 
                        and''.
    (b) Furnishing of Information.--Section 6045A(d) of such Code is 
amended to read as follows:
    ``(d) Return Requirement for Certain Transfers of Digital Assets 
Not Otherwise Subject to Reporting.--Any broker, with respect to any 
transfer (which is not part of a sale or exchange executed by such 
broker) during a calendar year of a covered security which is a digital 
asset from an account wholly controlled and maintained by such broker 
to an account which is not maintained by, or an address not associated 
with, a person that such broker knows or has reason to know is also a 
broker, shall make a return for such calendar year, in such form as 
determined by the Secretary, showing the information otherwise required 
to be furnished with respect to transfers subject to subsection (a). 
Information reported by brokers under this section shall be limited to 
customer information that is voluntarily provided by the customer and 
held by the broker for a legitimate business purpose.''.
    (c) Delayed Effective Date for Certain Information Reporting 
Changes; Reversal of Certain Additions to 6050I.--Section 80603 of the 
Infrastructure Investment and Jobs Act is amended--
            (1) by striking subsection (b)(3), and
            (2) in subsection (c), by striking ``December 31, 2023'' 
        and inserting ``December 31, 2025''.
    (d) Effective Dates.--
            (1) The amendments made by subsections (a) and (b) shall 
        apply to returns required to be filed and statements required 
        to be furnished after December 31, 2025.
            (2) The amendment made by subsection (c) shall take effect 
        as if included in the enactment of section 80603 of the 
        Infrastructure Investment and Jobs Act.

SEC. 4. STUDY AND REPORT ON TREATMENT OF DIGITAL ASSETS AS CASH UNDER 
              CERTAIN LAWS.

    (a) Study.--The Secretary, in consultation with the Financial 
Crimes Enforcement Network, and representatives of the digital asset 
industry, organizations focused on individual privacy and civil 
liberties, organizations engaged in advocacy, research or developing 
standards relating to digital asset use, shall conduct a study on the 
effect of expanding the definition of cash to include any digital asset 
(as defined in section 6045(g)(3)(D) of the Internal Revenue Code of 
1986) solely for purposes of--
            (1) section 6050I of such Code, and
            (2) section 5331 of title 31, United States Code.
    (b) Report.--Not later than 365 days after the date of the 
enactment of this Act, the Secretary shall provide to relevant 
committees a report that contains all findings and determinations made 
in carrying out the study under subsection (a), including an analysis 
of--
            (1) the interpretation of, regulations under, and 
        enforcement of the sections specified in paragraphs (1) and (2) 
        of subsection (a),
            (2) the privacy and liberty rights and interests of 
        taxpayers and other persons affected,
            (3) the cost-benefit analysis of compliance,
            (4) the effect on the use of and access to digital assets 
        and the financial system,
            (5) the effect on innovation, and
            (6) the effect on the economic competitiveness of the 
        United States.
    (c) Definitions.--For purposes of this section--
            (1) Relevant committees.--The term ``relevant committees'' 
        means--
                    (A) the Committee on Financial Services of the 
                House of Representatives,
                    (B) the Committee on Banking, Housing, and Urban 
                Affairs of the Senate,
                    (C) the Committee on Ways and Means of the House of 
                Representatives, and
                    (D) the Committee on Finance of the Senate.
            (2) Secretary.--The term ``Secretary'' means the Secretary 
        of the Treasury (or the Secretary's delegate).

SEC. 5. FINDINGS.

    Congress finds the following:
            (1) Advances in technology have led to the creation of 
        digital assets and blockchain technology that will improve the 
        United States financial system and create a more fair and 
        equitable structure for everyday Americans.
            (2) The reporting requirements under current law require 
        digital asset market participants to adhere to standards that 
        are incompatible with this technology's operation. This will 
        hinder the development of digital assets and its underlying 
        technology in the United States, shifting its development 
        outside the United States.
            (3) The Chinese Government's recent ban of cryptocurrency 
        transactions provides the United States an opening to further 
        enhance its role as the leading nation in the development of 
        innovative blockchain technologies. Providing clear rules for 
        both consumers and developers of digital assets is essential to 
        taking advantage of this opportunity.
            (4) Miners and validators, hardware and software 
        developers, and protocol developers are not actual brokers and 
        do not collect or have reason to collect the information 
        required under the Infrastructure Investment and Jobs Act.
            (5) It is not in the interest of American taxpayers for 
        Congress to create uncertainty.
            (6) Consistent and accurate reporting on digital asset 
        transactions is necessary. Congress must work to bring legal 
        and regulatory certainty to the digital asset industry. Clear 
        rules of the road fosters technology and innovation.
            (7) Any amendments made by this Act will not impact revenue 
        estimated from the Infrastructure Investment and Jobs Act.
                                 &lt;all&gt;
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