Prominent pro-virtual asset (cryptocurrency) politician, Senator Cynthia Lummis, has voiced concerns over tax issues.

Prominent pro-virtual asset (cryptocurrency) politician, Senator Cynthia Lummis, has voiced concerns over tax issues. She argues that under the current tax law, companies holding virtual assets could suffer unreasonable losses.

Senator Cynthia Lummis, a prominent voice for virtual assets in the political sphere, has expressed concerns regarding tax issues that could arise due to the administration's new economic policies. In a recent letter to Treasury Secretary Scott Besant, Lummis, along with Senator Bernie Moreno, requested intervention, highlighting the potential for the current tax law to generate unforeseen consequences for companies holding digital assets.

As reported by virtual asset specialized media outlet The Block on the 13th (local time), the senators highlighted a provision in the 'Inflation Reduction Act' passed during the Biden administration in August 2022. The provision introduces the Corporate Alternative Minimum Tax, imposing a 15% corporate tax on companies with an average annual income exceeding $1 billion on adjusted financial statements for three consecutive years prior to the first taxable year.

At the time of the Act's passage, it was generally assumed that this provision would not apply to digital assets, and the administration's focus was primarily on large, well-established companies. However, the senators pointed out that the situation has changed due to new accounting standards implemented by the Financial Accounting Standards Board.

The letter stated, "The combination of the new accounting standards and the Corporate Alternative Minimum Tax has led to unintended consequences," adding, "as a company's Bitcoin holdings increase, it may look good on the company on paper, but the tax liabilities on unrealized gains arise."

In essence, the senators are arguing that if corporate tax (ALT) is imposed under the new accounting standards, companies holding virtual assets could be subject to unfair taxes on unrealized gains. They further contend that such tax imposition could ultimately hinder U.S. investment.

Their concerns stem from the fact that while the administration focused on large companies like Apple and Meta, which are likely to be taxed at 15% or less, the senators assert that cryptocurrency companies could face even higher tax rates due to the significant increase in the price of Bitcoin over the past few years.

In their letter to the Treasury Secretary, the senators urged swift action to rectify this situation before it has irreversible repercussions on the U.S. economy. It remains to be seen how the Treasury will respond to these concerns and what measures, if any, will be taken to mitigate the potential for unfair taxation of companies holding digital assets.

News data source: kdj.com

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