Internal Revenue Bulletin 2025–48

Bulletin 2025-48: Crypto Staking, OBBBA Relief, and Q1 Rates

This edition of the Internal Revenue Bulletin (IRB) for November 24, 2025, contains a blend of administrative relief measures and guidance on emerging digital asset issues. A key highlight is Notice 2025-62, which provides penalty relief related to new information reporting requirements stemming from the One, Big, Beautiful Bill Act (OBBBA). Simultaneously, Revenue Ruling 2025-22 announces the interest rates for the first quarter of 2026, reflecting a continuation of existing rates. Finally, Revenue Procedure 2025-31 introduces a safe harbor for trusts engaging in cryptocurrency staking activities, representing a significant development in the evolving regulatory landscape for digital assets.

Notice 2025-62: Transition Relief for OBBBA Tip and Overtime Reporting

As previously mentioned, this bulletin contains Notice 2025-62, which provides penalty relief related to new information reporting requirements stemming from the One, Big, Beautiful Bill Act (OBBBA). Simultaneously, Revenue Ruling 2025-22 announces the interest rates for the first quarter of 2026, reflecting a continuation of existing rates. Finally, Revenue Procedure 2025-31 introduces a safe harbor for trusts engaging in cryptocurrency staking activities, representing a significant development in the evolving regulatory landscape for digital assets.

Notice 2025-62 addresses the immediate challenges faced by employers and payors due to the enactment of the One, Big, Beautiful Bill Act (OBBBA), Pub. L. No. 119-21. The OBBBA introduced significant tax changes, including new deductions under Sections 224 and 225 for qualified tips and qualified overtime compensation. Section 224 provides an income tax deduction for "qualified tips" received in an occupation that customarily receives tips, while Section 225 provides an income tax deduction for qualified overtime compensation.

The legislative backdrop to this notice stems from the OBBBA's creation of these new deductions, which consequently required new reporting mandates on forms like W-2s and 1099s. Specifically, employers were required to separately account for cash tips, overtime compensation, and the occupations of employees receiving tips. Sections 6041(a), 6041A(a), 6050W(a), and 6051(a) were amended to require payors to include separate accounting of these amounts on information returns. For example, Section 6051(a) now requires employers to include the total amount of cash tips and the employee's occupation on Form W-2.

However, a critical problem arose: systems and forms were not immediately updated to accommodate these new requirements for the 2025 tax year. The IRS recognized that employers and payors needed time to adapt their systems and processes. Therefore, Notice 2025-62 provides transition relief from penalties under Section 6721, which imposes penalties for failure to file correct information returns, and Section 6722, which imposes penalties for failure to furnish correct payee statements. The penalties under these sections can be significant, with rates for 2026 (for tax year 2025 returns) set at $340 per return for failures and $680 per return for intentional disregard.

The core rule established by Notice 2025-62 is that the IRS will grant penalty relief for the 2025 tax year for failures to include the specific new data points (tips, occupation, overtime) required by the OBBBA. This means that employers and payors, while still obligated to file information returns and furnish payee statements, will not be penalized under Sections 6721 and 6722 for omitting or incorrectly reporting these specific new OBBBA-required details during this transition period.

The implication for tax practitioners is clear: Employers and payors must still diligently file all required information returns (e.g., Forms W-2, 1099) and furnish statements. The penalty relief is conditional. It applies only if the filer makes a good-faith effort to comply with existing reporting requirements and accurately reports all other required information. This relief is limited to failures directly related to the new OBBBA reporting requirements for qualified tips, occupations, and qualified overtime compensation. Note, a complete return or statement must include the amount of cash tips that would otherwise be required to be separately accounted for on the return or statement in the aggregate amount of payments required to be reported under section 6041(a) or (d), section 6041A(a) or (e), the gross amount of reportable payment transactions required to be reported under section 6050W(a) or (f), or the total amount of wages paid required to be reported under section 6051(a) or (d).

Rev. Rul. 2025-22: Interest Rates Hold Steady for Q1 2026

Following the penalty relief provided in Notice 2025-62 related to the One, Big, Beautiful Bill Act (OBBBA), Revenue Ruling 2025-22 addressed the applicable interest rates for the first calendar quarter of 2026.

The Rule

In Rev. Rul. 2025-22, the IRS announced the interest rates determined under Section 6621, which governs interest on overpayments and underpayments of tax. For the calendar quarter beginning January 1, 2026, the rates were set as follows:

• 7% for overpayments (6% in the case of a corporation)
• 7% for underpayments
• 9% for large corporate underpayments.

The ruling also specified that the interest rate paid on the portion of a corporate overpayment exceeding $10,000 would be 4.5%.

The Context

Section 6621 establishes the framework for determining interest rates on tax underpayments and overpayments. Section 6621(a)(1) states that the overpayment rate is the sum of the federal short-term rate plus 3 percentage points (2 percentage points for corporations), except that the rate for the portion of a corporate overpayment exceeding $10,000 for a taxable period is the sum of the federal short-term rate plus 0.5 of a percentage point. Section 6621(a)(2) provides that the underpayment rate is the sum of the federal short-term rate plus 3 percentage points. Section 6621(c) further stipulates that for large corporate underpayments, the underpayment rate under Section 6621(a)(2) is determined by substituting "5 percentage points" for "3 percentage points."

The Implication

These rates are crucial for tax practitioners, particularly in calculating estimated tax penalties under Sections 6654 and 6655, which address the addition to tax for individuals and corporations, respectively, for failure to pay estimated tax. These rates also apply to amounts bearing interest during the specified calendar quarter.

Rev. Proc. 2025-31: Safe Harbor Opens Door for Crypto Trusts to Stake Assets

As discussed in the previous section, understanding interest rates on tax payments is crucial for practitioners. Now, shifting to the emerging landscape of digital assets, the IRS has issued further guidance in Revenue Procedure 2025-31, providing a safe harbor for certain investment trusts engaging in cryptocurrency staking activities.

The Rule

Revenue Procedure 2025-31 addresses whether staking digital assets by a trust would be considered a "power to vary" the investment of the certificate holders under Treasury Regulation Section 301.7701-4(c). This regulation distinguishes investment trusts from business entities. Specifically, Section 301.7701-4(c) states that an "investment" trust is not classified as a trust if there is a power under the trust agreement to vary the investment of the certificate holders. The IRS, in this revenue procedure, establishes a safe harbor under which staking will not be treated as a power to vary, allowing the trust to maintain its tax status as an investment trust and a grantor trust.

To qualify for the safe harbor, the trust must adhere to strict requirements, including:

1. Exchange Listing: Interests in the trust must be traded on a national securities exchange and comply with Securities and Exchange Commission (SEC) regulations.
2. Single Asset Class: The trust's assets are limited to cash and a single type of digital asset transacted on a permissionless network using a proof-of-stake consensus mechanism.
3. Custodial Control: A custodian must hold the digital assets at addresses controlled by the custodian, with exclusive access to private keys.
4. Staking Purpose: The staking must protect and conserve trust property by mitigating the risk of a single party controlling a majority of the staked assets.
5. Activity Limitations: The trust's activities are restricted to accepting deposits, holding assets, paying expenses, distributing assets, and directing staking activities. Critically, the trust must be prohibited from seeking to take advantage of variations in the market to improve the investments of trust interest holders
6. Independent Staking: The trust must direct the staking of its digital assets through one or more custodians who facilitate the staking of the digital assets on the trust’s behalf with one or more staking providers. The trust and the sponsor are unrelated to the staking provider.
7. No Control of Staking Provider: The trust, the custodian, and the sponsor have no legal right or arrangement to participate in or direct or control the activities of the staking provider in any way.
8. Assets Available for Staking: All of the digital assets of the trust must be made available to the staking provider to be staked at all times
9. Liquidity Reserve: When appropriate in the trustee’s or sponsor’s reasonable judgment to comply with the trust’s liquidity risk policies and procedures required by the national securities exchange on which the interests in the trust are listed and traded, a trust may stake less than all its digital assets to create and maintain a liquidity reserve.
10. Short-term Temporary Basis Events: In addition to holding in a liquidity reserve, the trust also may, on a short-term temporary basis and in connection with certain events, hold additional digital assets that are not staked, provided that the trust shall make such digital assets available for staking as soon as and to the extent reasonably possible.
11. Events: The trust also may, in connection with certain events, hold additional digital assets that are not staked, provided that the trust shall make such digital assets available for staking as soon as and to the extent reasonably possible.
12. Contingent Liquidity Arrangement: When appropriate in the trustee’s or sponsor’s reasonable judgment to comply with the trust’s liquidity risk policies and procedures required by the national securities exchange on which the interests in the trust are listed and traded, the trust may enter into a contingent liquidity arrangement intended to mitigate an adverse liquidity event that otherwise would prevent the fund from distributing digital assets or cash to trust interest holders in redemption of their interests in the trust
13. Indemnification from Slashing: To protect or conserve the trust’s property, the trust’s digital assets are indemnified from slashing due to the activities of staking providers. "Slashing" refers to the penalty imposed by some proof-of-stake protocols where validators lose a portion of their staked assets if they fail to validate transactions correctly or act maliciously.
14. Distribution of rewards: The only new assets received by the trust as a result of staking its digital assets are additional units, in the same form, of the single type of digital asset held by the trust. The trust’s staking rewards, net of trust expenses, are, in proportion to the trust interest holders’ relative interests in the trust, either distributed in-kind to trust interest holders or sold for cash and the proceeds distributed to trust interest holders, in each case on a periodic basis that is no less frequently than quarterly. The trust treats all staking rewards consistently.

The Revenue Procedure also provides a nine-month window for existing trusts to amend their governing instruments to authorize staking while remaining eligible for the safe harbor.

The Context

This guidance comes amid growing interest in digital assets and the potential for investment trusts, such as Exchange Traded Products (ETPs), to incorporate them. "Proof-of-stake" is a consensus mechanism where validators "stake" their cryptocurrency holdings to validate transactions and secure the network. By staking, they earn rewards in the form of additional cryptocurrency or transaction fees. This creates an incentive to participate in network validation. Without this Revenue Procedure, it was unclear if the act of 'staking' could be construed as active management by the trust, leading to it being classified as a business entity taxable as a corporation rather than a passive investment vehicle.

The SEC has also been active in this space, as described in the revenue procedure. The SEC Division of Corporation Finance issued a statement on protocol staking activities on May 29, 2025. Also in 2025, the SEC approved in-kind creations and redemptions for crypto ETPs and rule changes proposed by three national securities exchanges to adopt generic listing standards for exchange-traded products that hold commodities, including certain digital assets.

The Implication

This Revenue Procedure is a significant development because it paves the way for crypto ETFs and other investment trusts to earn yield on their digital asset holdings through staking without jeopardizing their pass-through tax status. By providing a clear safe harbor, the IRS has reduced the uncertainty surrounding the tax treatment of staking for these investment vehicles.

Tax practitioners advising trusts that hold digital assets should carefully review Revenue Procedure 2025-31 and ensure that their clients' activities meet all the requirements of the safe harbor. One critical aspect is the need for a qualified custodian to hold the private keys and manage the staking process. This requirement prevents the trust itself from actively managing the staking rewards to profit from market timing, which would be considered a "power to vary." The guidance also necessitates adherence to SEC regulations and national securities exchange rules, adding another layer of compliance. Finally, the staking rewards must be distributed in-kind or sold for cash with the proceeds distributed to investors on a quarterly basis. These requirements are crucial for maintaining the trust’s eligibility for grantor trust status.