On Jan. 9, 2025, congressman Earl Carter proposed a bill replacing the US tax code with a national consumption tax and abolishing the IRS. Earlier this month, the IRS was sued by Blockchain Association over the new reporting rule. Table of Contents New tax system IRS abolition IRS vs the crypto community New tax system The H.R. 25 bill, or The Fair Tax Act of 2025 , was introduced by Rep. Earl “Buddy” Carter (R–GA). The bill challenges the existing U.S. tax code and the taxation policy status quo and aims to promote freedom, fairness, and economic opportunity. The Fair Tax Act calls to repeal the income, payroll, estate, and gift taxes. Instead, the act proposes enacting the sales tax. The Fair Tax Act: ✅Abolishes the IRS ✅Repeals the Tax Code ✅Puts American in charge of their tax rate ✅Forces illegal immigrants to pay taxes & more – read here👇 https://t.co/SjLO4RRaKR — Buddy Carter (@RepBuddyCarter) January 10, 2025 According to the bill, the existing Federal income tax retards the economic growth and international competitiveness of the U.S., discourages small businesses and farms, and downgrades the standard of living of Americans, decreasing the savings and investment rates. On top of that, the bill indicates the harm of the existing unnecessary administrative and compliance cost pressure on individual and corporate taxpayers. Privacy violations and lack of transparency in taxation are other problems associated with the Federal income tax. According to the Fair Tax Act, the Social Security, Medicare payroll taxes, and self-employment taxes hurdles employment rates. The alternative proposed in the bill is a broad-based national sales tax on goods and services purchased for final consumption. The act proposes to tax all consumption of goods and services in the U.S. once, preventing double, multiple, and cascading taxation. According to the bill, it will facilitate savings and investment, improve the standard of living of Americans, help businesses, and undo all other evils associated with the actual tax system. Also, the Fair Tax Act provides notes on how the government should foster the change in the policy. IRS abolition One of the most radical changes proposed in the Fair Tax Act is the Internal Revenue Service abolition. The move is meant to get rid of the bureaucratic burdens on individual and business taxpayers. According to Carter, the tax system introduced in the legislation eliminates the need for the IRS. The taxes should be easy and transparent so that people will not need professional assistance to fill out their taxes. The bill is supported by a number of Republican congressmen, including Barry Loudermilk, Eric Burlison, John Carter, Scott Perry, John Rutherford, Warren Davidson, Andy Biggs, Dale Strong, Rich McCormick, Andy Harris, and Andrew Clyde. The latter noted that the act “provides a commonsense solution to eliminate the need for the weaponized IRS, simplify our tax code, and foster economic prosperity”. Rep. Strong adds that the proposed taxation system will make illegal immigrants pay taxes fairly. IRS vs the crypto community The IRS was sued over the new reporting rules introduced by the service the day the rules were introduced, i.e., on Dec. 28, 2024. The complaint is signed by several organizations, including Blockchain Association, Texas Blockchain Council, and DeFi Education Fund. Read more: IRS targets DeFi: Blockchain groups challenge new broker reporting rule The new reporting rules impose a threat to the well-being of the DeFi sector as it redefines the broker notion. According to the new rules, DeFi platforms will be considered brokers. They will have to provide the transaction info and proceeds to the IRS until 2027. The complaint clears that DeFi platforms are not brokers, and that’s what makes them unique and innovative. As peer-to-peer systems, they don’t depend on brokers or any other intermediaries, so the IRS’ new rules should not apply to them, but they do. The plaintiffs find the rules unconstitutional and harmful to American development and leadership in the crypto industry. They note that if the rules get into effect, this may impact many leading industry brands to find better jurisdictions instead of working in America. Considering this, the IRS abolition may be seen as a possibility to end the service’s attacks on the DeFi ecosystems. However, it is not clear yet if the Fair Tax Act of 2025 will be adopted. The history of the act began back in 1999. Will 2025 be a breakthrough year? We’ll see. You might also like: New crypto haven or US competitor: Russia approves crypto taxation
