US Treasury Targets Crypto Taxes with New Reporting Rule
Under a proposed US Treasury Department rule announced on Friday, cryptocurrency brokers, including exchanges and payment processors, would be required to report new information on users’ sales and swaps of digital assets to the Internal Revenue Service (IRS)., a new report by Reuters has suggested.
The rule is part of a larger effort by Congress and regulatory agencies to tighten down on cryptocurrency users who may not be paying their taxes.
According to the Treasury Department, a proposed new tax reporting form called Form 1099-DA is intended to help taxpayers identify if they owe taxes and would save crypto users from having to perform laborious computations to establish their gains.
According to Treasury, it would also subject digital asset brokers to the same information reporting regulations as brokers for conventional financial instruments like as bonds and equities.
The proposal defines a “broker” as both centralized and decentralized digital asset trading platforms, crypto payment processors, and certain online wallets where users store digital assets. The law would apply to both cryptocurrencies such as bitcoin and ether as well as non-fungible tokens.
To aid with tax preparation, brokers would need to deliver the papers to both the IRS and digital asset holders.
The new regulations derive from the $1 trillion (2021 Infrastructure Investment and Jobs Act), which contained a clause aimed at increasing tax reporting requirements for digital asset brokers. It directed the IRS to specify what firms qualified as crypto brokers and to provide reporting forms and instructions.
It also expanded reporting rules for certain cash transactions above $10,000 (about Rs. 8,26,360) to digital assets.
The new laws were anticipated to bring in close to $28 billion (almost Rs. 2,31,380 crore) over a decade when the measure was passed.
The Treasury suggested that the restrictions apply to brokers beginning in 2025 for the 2026 tax filing season.
The Treasury Department and the Internal Revenue Service are soliciting comments on the idea until October 30. On November 7-8, they will also hold public hearings on the idea.
Keywords: Crypto, Crypto Tax, Internal Revenue Service
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