H.R. 9175, the Tax Clarity for Mining and Staking Act, introduced by Representative Mike Carey, aims to allow miners and stakers to defer taxes on rewards until sold. An amendment by Representative Steven Horsford caps this deferral at five years, compelling validators to recognize income regardless of token transactions.
Under current IRS guidelines, income tax on digital assets from mining or staking is owed immediately upon receipt. H.R. 9175 would classify these rewards as ordinary income while allowing deferred tax treatment until asset sale or disposal.
The proposed five-year cap raises significant concerns. The Blockchain Association and the Crypto Council for Innovation advocate for the bill's passage without amendments, highlighting that the original deferral options consider market realities.
As of late June 2023, H.R. 9175 is being reviewed by the House Ways and Means Committee, awaiting formal debate and voting.
If unchanged, the bill allows deferral for stakers and miners, benefitting institutional players through its grantor trust provision. However, the Horsford amendment could impose an artificial deadline, complicating tax planning for validators, particularly those with long-term investments.