Less Tax Paperwork for Digital Asset Owners Act
- Sponsor
- Rep. Yakym, Rudy [R-IN-2]
- Committees
- Ways and Means Committee (primary)
- Last action
- Jun 8, 2026
Bottom line
The bill aims to reduce the administrative burden of tracking and reporting small digital asset transactions and simplify accounting for common digital assets and stablecoins, potentially making digital asset ownership more accessible for everyday users.
What it actually does
This bill amends the Internal Revenue Code of 1986 to simplify tax compliance for individuals and certain businesses dealing with digital assets. It introduces a de minimis exception for small network fees, establishes simplified accounting rules for widely traded digital assets, and provides special tax treatment for qualified U.S. dollar stablecoin transactions. Additionally, it modifies broker reporting requirements to align with these new rules and defines various digital asset terms.
Proponents argue
Proponents argue that current tax rules, designed for traditional assets, create an undue and often impractical compliance burden for individuals engaging in digital asset transactions, especially for small network fees or frequent trading. They contend that this bill provides much-needed clarity and simplification, fostering innovation in the digital asset space and encouraging broader adoption by reducing friction for ordinary users, without creating significant tax loopholes.
Opponents contend
Opponents might argue that while simplification is desirable, the bill could create new avenues for tax avoidance or make it harder for the IRS to track digital asset activity, potentially leading to revenue loss. Concerns could also be raised about the definitions of 'widely traded' or 'qualified U.S. dollar stablecoin,' suggesting they might be too broad or too narrow, leading to unintended consequences or competitive disadvantages for certain assets or issuers. Some may also worry about the administrative burden on the IRS to implement these new rules and provide necessary guidance.
The bill is moderately complex due to its technical tax language and numerous definitions. An informed reader would need the estimated time to fully grasp its implications, which is reasonable given its scope.
Section 2, amending Part III of subchapter O of chapter 1 of subtitle A (new Sec. 1044)
De Minimis Network Fee Exception
This provision creates an exception where no gain or loss is recognized on the disposition of a digital asset used to pay a 'de minimis network fee' (up to $10) for validating another digital asset transaction. It aims to prevent taxpayers from having to track and report tiny gains or losses from transaction fees. The unrecognized gain reduces the basis of other assets or deductions. This exception does not apply to professional traders, brokers, dealers, or those with over 5,000 transactions annually, unless an administrative convenience exception is granted by the Secretary.
Supporters argue
Supporters argue that requiring taxpayers to track and report minuscule gains or losses on network fees is an impractical and burdensome exercise that yields negligible tax revenue. This provision simplifies compliance for common digital asset activities, making the tax system more user-friendly without encouraging significant tax avoidance.
Critics contend
Critics might contend that even small exemptions can create administrative complexities for the IRS in verifying compliance and preventing abuse, especially given the difficulty of tracking digital asset transactions. They might also argue that the $10 threshold could be exploited or that it sets a precedent for further exemptions that could erode the tax base.
Tradeoffs
The provision balances the desire for tax simplification for individual users against the need to maintain tax integrity and prevent abuse by professional entities. The administrative convenience exception attempts to provide flexibility while the exclusions for high-volume traders aim to prevent exploitation.
Section 3, amending Part IV of subchapter O of chapter 1 of subtitle A (new Sec. 1051)
Simplified Accounting for Widely Traded Digital Assets
This section allows taxpayers to elect a simplified accounting method for 'widely traded digital assets.' Instead of tracking individual asset bases, taxpayers would recognize annual aggregate gain or loss for each designated type of digital asset. This gain or loss is calculated based on the fair market value of assets held at year-end, plus amounts realized from sales/exchanges, minus acquisitions. All recognized gain or loss under this method is treated as short-term capital gain or loss. The election is generally irrevocable for 5 years and has specific transition rules for election, revocation, and certain transfers.
Section 4, amending Part IV of subchapter O of chapter 1 of subtitle A (new Sec. 1063)
Treatment of U.S. Dollar Stablecoin Transactions
This section provides special tax treatment for 'qualified U.S. dollar stablecoin' transactions. It generally treats the basis of acquired stablecoins, and the value of stablecoins used or received in exchange, as equal to their redemption value (the dollar amount the issuer is obligated to convert/redeem it for). This simplification applies if the transaction value is within 0.5% of the redemption value. This exception does not apply to professional traders, brokers, dealers, or those with over 5,000 stablecoin transactions annually (with exceptions for business payments).
Section 5, amending Section 6045(g)
Broker Requirements Alignment
This section amends broker reporting requirements to align with the new tax simplification rules. It exempts qualified U.S. dollar stablecoins (acquired at redemption value) from 'specified digital asset' reporting. It also provides special rules for digital assets used to pay de minimis network fees and for widely traded digital assets under the simplified accounting election. Brokers are generally not required to report individual de minimis fee dispositions but must report aggregate information. For widely traded assets, brokers report aggregate sales, acquisitions, and year-end holdings.
Section 6, amending Section 7701
Digital Asset Definitions
This section adds new definitions to the Internal Revenue Code for various digital asset terms. Key definitions include 'digital asset' (digital representation of value on a cryptographically secured distributed ledger), 'traded digital asset' (fungible, readily available quotations), 'widely traded digital asset' (traded, over $500M market cap, not more than 10% owned by related parties), 'tokenized digital asset' (value related to something other than ledger operation), 'wrapped digital asset' (redeemable 1:1 for another digital asset on a different ledger), 'qualified U.S. dollar stablecoin' (issued by a permitted payment stablecoin issuer under the GENIUS Act), 'digital asset transaction,' and 'validation.'
This clause allows certain persons in a trade or business (who would otherwise be excluded from the de minimis network fee exception) to still qualify if they demonstrate to the Secretary that not applying the exclusion will not result in a substantial Federal revenue loss. The Secretary is required to issue guidance identifying types of taxpayers that qualify and specifying information needed for demonstration, taking into account methods for selecting digital assets for fees and average holding periods, and reducing revenue loss by additional administrative/compliance costs.
Section 2(e)(1)(B) - De Minimis Network Fee Exception: Administrative Convenience Exception
Why it matters:This is standard legislative practice to provide the Treasury Department with flexibility to refine rules and address specific cases without requiring further legislation. It acknowledges the complexity of applying broad rules to diverse business models.
Case for: Supporters would argue this provides crucial flexibility, allowing the IRS to tailor the de minimis exception to businesses that genuinely do not pose a revenue risk, thereby maximizing the administrative burden reduction where it's most effective. It prevents a 'one-size-fits-all' approach from penalizing legitimate businesses.
Case against: Critics might argue that this provision grants significant discretionary power to the Secretary, potentially leading to inconsistent application, lobbying for favorable treatment, or creating new compliance burdens for businesses trying to qualify for the exception. The criteria for 'substantial Federal revenue loss' and 'additional administrative costs' are subjective and could be difficult to quantify reliably.
Estimated impact: Could significantly broaden the applicability of the de minimis network fee exception for certain businesses, potentially impacting a large number of small to medium-sized enterprises that engage in digital asset transactions as part of their operations but are not primarily digital asset traders.
For a digital asset to be considered 'widely traded,' not more than 10 percent of its units can be owned, directly or indirectly, by the taxpayer or any related person (as defined by sections 267(b) or 707(b)(1)) at any time during the current or preceding taxable year.
Section 6(p)(3)(A)(iii) - Definition of 'Widely Traded Digital Asset' (Ownership Threshold)
Why it matters:This is a standard anti-abuse provision in tax law, designed to prevent individuals or closely-held groups from manipulating the 'widely traded' status of an asset for tax benefits. Its technical nature means it's appropriately placed within definitions.
Case for: Proponents argue this ownership threshold is crucial to prevent individuals or related parties from creating or controlling an asset to qualify it as 'widely traded' for simplified accounting purposes, thereby exploiting potential tax advantages not intended for closely-held assets.
Case against: Critics might argue that a 10% ownership threshold could be overly restrictive, especially for early investors or founders of legitimate digital assets that later become widely traded. It could also create complex tracking requirements for taxpayers to ensure they don't inadvertently exceed the threshold through indirect ownership or related party holdings.
Estimated impact: Limits the applicability of simplified accounting for assets where a single entity or related group holds a significant portion of the supply, ensuring the benefit is primarily for truly decentralized and widely held assets.
Defines 'qualified U.S. dollar stablecoin' by referencing the 'permitted payment stablecoin issuer' and 'foreign payment stablecoin issuer' definitions from Section 2(23) and 2(12) of the GENIUS Act, respectively. It also defines 'U.S. dollar stablecoin' by referencing Section 2(22) of the GENIUS Act, substituting 'dollars' for 'monetary value.'
Section 6(p)(7)(A) and (B) - Definition of 'Qualified U.S. Dollar Stablecoin'
Why it matters:This is a common legislative technique to avoid redundancy and ensure consistency across related statutes. It implies that H.R. 9178 is intended to work in conjunction with the GENIUS Act, which likely provides a comprehensive regulatory framework for stablecoins.
Case for: Proponents argue that referencing an existing or proposed regulatory framework for stablecoins ensures a consistent and coherent approach to digital asset regulation across different laws. It prevents conflicting definitions and leverages the expertise developed in drafting the GENIUS Act.
Case against: Critics might argue that this creates legislative fragility, as changes to the GENIUS Act could inadvertently alter the tax treatment of stablecoins without direct consideration by tax committees. It also makes the tax code less self-contained and harder for the average person to understand without cross-referencing multiple complex statutes.
Estimated impact: The tax treatment of stablecoins under this bill is entirely dependent on the definitions and regulatory status established by the GENIUS Act. This means the scope of 'qualified' stablecoins is determined by an external legal framework, potentially impacting which stablecoins benefit from simplified tax treatment.