The US
Department of Treasury alongside the Internal Revenue Service (IRS) today
(Friday) announced new proposed rules for “brokers” such as crypto trading
platforms, crypto payment processors and digital asset wallet providers. The
agency noted that the proposed regulation will require these “brokers” to
report certain crypto sales and exchange transactions.
In a statement, the Treasury Department noted
that the new regulation is part of efforts to implement President Joe Biden’s
administration’s Infrastructure Investment and Jobs Act. The goal
of the legislation, which has been signed into law and is sometimes called the
Bipartisan Infrastructure Law, is to improve the United States’ infrastructure and
create jobs.
Specifically,
the 282-page-long proposed regulation is targeted at combating tax
evasion while helping compliant taxpayers determine how much they owe on their digital asset sale or
exchange transactions.
“Under
current law, taxpayers owe tax on gains and may be entitled to deduct losses on
digital assets when sold, but for many taxpayers, it is difficult and costly to
calculate their gains,” Treasury explained. “These proposed rules require
brokers to provide a new Form 1099-DA to help taxpayers determine if they owe
taxes, and would help taxpayers avoid having to make complicated calculations
or pay digital asset tax preparation services in order to file their tax
returns.”
Furthermore,
the Treasury explained that the new regulations will help
to subject crypto brokers to the same tax reporting rules followed by those that deal in securities
and other financial instruments. These rules also “align tax reporting on
digital assets with tax reporting on other assets, and, as a result, avoid
preferential treatment between different types of assets,” the agency said.
However, the proposed rules are not expected to come into force until 2016 when crypto brokers
will be required to answer for transactions from the prior year. To continue work on the rules, the Treasury Department and IRS are accepting public comments on them until October 30, 2023.
Regulation
Meets Resistance
However,
the new rules have attracted criticism from both the political class and
industry actors. In a statement released on Friday, Patric
McHenry, the Chairman of the US…
