U.S. Senators requested that the Treasury exempt crypto firms from paying tax, as local companies could lose the edge in digital finance if they are taxed more than foreign companies.
In a joint letter addressed to the Secretary of the Treasury, Scott Bessent, Senators Cynthia Lummis (R-WY) and Bernie Moreno (R-OH), appealed that the Biden era rule be reconsidered and examined on how it applies to digital asset holding. The Corporate Alternative Minimum Tax (CAMT) that came into effect after Joe Biden signed the Inflation Reduction Act, imposes a minimum 15% tax on adjusted financial statement income (AFSI) of any corporation that averages $1 billion or more in the last three years.
On a tweet, Lummis wrote, “Our edge in digital finance is at risk if U.S. companies are taxed more than foreign competitors” if the CAMT is imposed. As such, “@berniemoreno & I urged the @USTreasury to lift an unintended tax burden on U.S. digital asset companies. To lead the world in digital assets, we need a level playing field.”
Interestingly, the CAMT with the combination of a newly established accounting standard was introduced by the Financial Accounting Standards Board (FASB) in response to a request made by Senators Lummins and Sinema to make the system more favorable to corporate digital holdings.
Although at beginning the new accounting standard was embraced with open arms, however, lateron it backfired as the standard required fair value or mark to market value method of accounting when making the financial statement. This made corporation with appreciated asset that exceed the $1 billion level on the AFSI pay taxes on unrealized gains. While other corporations with unrealized losses pay less taxes.
As such, the duo seeked the Treasury’s approval to adjust the AFSI definition to exclude unrealized losses and gains on corporation holdings subject to CAMT. Or otherwise adjust the AFSI definition to exclude the unrealized gains and losses from the fair market value for the purpose of calculating the AFSI.
