Digital Asset Tax Certainty Act

(a) In general. The Secretary shall perform a study on the feasibility of using new digital technologies, including zero-knowledge proofs, smart contracts, and other blockchain technology for increased compliance, efficiency, and data protection in connection with information reporting, withholding, and taxpayer compliance regarding digital asset transactions.

(b) Study requirements. In conducting the study under subsection (a), the Secretary shall—

(1) investigate the extent to which such new digital technology can—

(A) reduce compliance costs and burden for withholding agents on cross-border transactions involving digital assets,

(B) replace traditional information reporting, withholding, transaction reports, and other financial information reporting for digital asset transactions using smart contract based withholding, instantly verified self-reporting with zero-knowledge proofs, or other trustworthy alternatives to existing third-party information collection, withholding, and reporting for on-chain transactions (or to provide an equivalent to such collection and reporting in cases where no intermediary currently provides equivalent data), and

(C) improve tax administration, reduce compliance costs, and improve taxpayer data security,

(2) evaluate the effectiveness of current withholding and backup withholding rules as applied to digital assets (including digital assets derived from staking activities) and assess whether existing timing, liquidity, valuation, and remittance requirements are workable where digital assets may be locked or otherwise unavailable for immediate use,

(3) identify challenges for payors, withholding agents, and the Internal Revenue Service in applying existing withholding and backup withholding rules and provide recommendations for legislative changes that would improve administration of withholding and backup withholding for digital assets,

(4) emphasize data security and individual privacy improvements, including reducing identity theft risks from providing sensitive information to parties other than the Internal Revenue Service for reporting purposes, in considering the efficacy of such new digital technologies, and

(5) coordinate with stakeholders, such as technology developers, industry leaders, and data privacy and consumer protection experts, to identify new digital technologies, that are currently feasible or may be feasible in the near future, to promote efficient tax administration and reduced compliance burden for the digital economy.

(c) Report to Congress. Not later than September 30, 2028, the Secretary shall submit a written report to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate that includes all of the findings of the Secretary with respect to the study conducted under subsections (a) and (b). Such report shall include a description of—

(1) the recommendations of the Secretary regarding the adoption of any new digital technologies for the purposes described in subsection (a),

(2) any legislative changes to the tax laws necessary to implement such recommendations,

(3) any additional resources required by the Secretary for such implementation, and

(4) the amount of time required to complete such implementation.

(d) Secretary. For purposes of this section, the term Secretary means the Secretary of the Treasury or the Secretary’s delegate.