Lawmakers ask IRS to review Crypto staking tax guidance

A group of Republican lawmakers led by Mike Carey has urged the Internal Revenue Service to revisit its rules on the taxation of cryptocurrency staking rewards, arguing that the current framework is burdensome, inaccurate, and harmful to U.S. competitiveness in digital assets.

In a letter sent to Scott Bessent, the acting commissioner of the Internal Revenue Service (IRS), the lawmakers called for a review of the agency’s 2023 guidance, Revenue Ruling 2023-14, before the start of the 2026 tax year. 

The ruling requires crypto investors to include staking rewards in their gross income once they gain “dominion and control” over the tokens, and to report a second taxable event if those rewards are later sold at a different price.

According to the letter, this approach creates a “staking tax regime that is burdensome to comply with, difficult to administer, and out of step” with the administration’s stated goal of making the U.S. a global leader in digital assets. 

The lawmakers argue that staking rewards are newly created property, similar to mined resources, and therefore should not be taxed as income at the moment they are created. Instead, they say taxation should occur only when the rewards are sold or otherwise disposed of.

The lawmakers contend that the IRS ruling fails to reflect the technological and economic realities of how blockchains operate. They note that miners and stakers are the first owners of newly minted tokens and that, under foundational principles of tax law, new property is typically taxed upon sale rather than creation. 

Taxing rewards immediately, they argue, exposes taxpayers to price volatility risk and creates significant compliance challenges.

The letter also points to a 2025 report from the Trump administration on strengthening U.S. leadership in digital financial technology, which recommended that the Treasury Department and the IRS review prior guidance on the timing of income from staking and mining. 

The lawmakers said revising or replacing the ruling would support innovation, reduce administrative complexity, and encourage broader participation in network security activities such as staking.

In addition to calling for updated guidance, the group asked the IRS to explain the analysis behind the 2023 ruling, including whether the agency considered compliance burdens, technological processes, and the impact on U.S. competitiveness. 

They also pressed the IRS on whether any administrative barriers could prevent issuing revised guidance before the end of 2025.