TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Biden administration unveils new crypto tax reporting rules
The rule is part of a broader push by Congress and regulatory authorities to crack down on crypto users who may be failing to pay their taxes.
Change Size
The Bitcoin logo is seen on a Coinstar cryptocurrency ATM at a grocery store in Washington, DC, on Jan. 19, 2023. (AFP/Stefani Reynolds )
Cryptocurrency brokers, including exchanges and payment processors, would have to report new information on users' sales and exchanges of digital assets to the Internal Revenue Service (IRS) under a proposed US Treasury Department rule published on Friday.
The rule is part of a broader push by Congress and regulatory authorities to crack down on crypto users who may be failing to pay their taxes.
A proposed new tax reporting form called Form 1099-DA is meant to help taxpayers determine if they owe taxes, and would help crypto users avoid having to make complicated calculations to determine their gains, the Treasury Department said.
It would also subject digital asset brokers to the same information reporting rules as brokers for other financial instruments, such as bonds and stocks, Treasury said.
Under the proposal, the definition of a "broker" would include both centralized and decentralized digital asset trading platforms, crypto payment processors and certain online wallets where users store digital assets. The rule would cover cryptocurrencies, like bitcoin and ether, as well as non-fungible tokens.
Brokers would need to send the forms to both the IRS and digital asset holders to assist with their tax preparation.
The new requirements stem from the US$1 trillion 2021 Infrastructure Investment and Jobs Act, which included a provision that aimed to increase tax reporting requirements for digital asset brokers. It instructed the IRS to define what firms qualified as crypto brokers and provide forms and instructions for reporting.
It also extended reporting requirements for certain cash transactions of more than $10,000 to digital assets.
At the time the bill was passed, it was estimated that the new rules could bring in close to $28 billion over a decade.
The Treasury proposed that the rules would be effective for brokers in 2025 for the 2026 tax filing season.
"This is part of a broader effort at Treasury to close the tax gap, address the tax evasion risks posed by digital assets, and help ensure that everyone plays by the same set of rules," the Treasury said in a statement.
The IRS currently requires crypto users to report on their tax returns many digital asset activities, including trading cryptocurrencies, regardless of whether the transactions resulted in a gain. Users are required to make that calculation themselves, and the platforms on which digital assets trade do not give the IRS that information.
Several Democratic senators, including Elizabeth Warren, urged the Treasury in a letter sent earlier this month to quickly implement the rules, arguing that otherwise tax evaders and crypto intermediaries “will continue to game the system.”
The Treasury Department and the IRS are accepting feedback on the proposal until Oct. 30. They will also hold public hearings on the proposal on Nov. 7-8.
