The U.S. Government Unveils New Crypto Tax Reporting Rules


  • The U.S. government has proposed new reporting rules for crypto tax.
  • The proposal stems from a 2021 bill.
  • The proposal redefines “brokers” to include more players.

The U.S. Treasury Department has proposed new crypto tax reporting rules, giving clarity on how crypto users, firms, and investors will meet their tax filing obligations.

Seen as an escalated move by the federal government to curb tax evasion in the digital assets sector, the proposal has twin goals: to crack down on investors who may not be remitting taxes on crypto proceeds and to simplify the process of tax compliance for law-abiding users.

Reporting Crypto Proceeds

Stemming from the 2021 Infrastructure Investment and Jobs Act, which aimed at expanding tax requirements for businesses operating as crypto brokers, the new proposal extrapolates the definition of “broker” to include digital asset payment processors, centralized and decentralized crypto exchanges, certain crypto wallet providers, and digital asset issuers.

Per the proposal, crypto brokers would be required to fill out Form 1099s and send annualized reports containing gross transaction proceeds to their tax-paying customers and to the IRS, starting in 2026 for fiscal year 2025.

A year later, following the 2025 tax season, the proposal would require crypto brokers to report cost basis to the IRS, which includes the amount of money customers paid for their assets.

Miners Let Off the Hook

Miners who receive fees for validating transactions on blockchain networks would be exempted from the proposal’s reporting requirements, as they are not considered brokers or intermediaries in this context. Similarly, firms that offer transaction validation services on blockchain networks are out of the proposal’s reach.

The development comes after a group of Democratic lawmakers led by Senator Elizabeth Warren wrote a letter to the Internal Revenue Service (IRS) and Treasury Department on August 1, urging the agencies to seal the burgeoning crypto tax gap or risk losing $1.5 billion in tax revenue for the 2024 financial year.

The IRS has been eyeing to tax crypto proceeds for a while; here is one instance:

‘Stake and Pay’: IRS Declares Staking a Taxable Event

Are you worried about crypto tax compliance? Read:

Crypto Tax: Basics You Need to Know Before Buying Your First Cryptocurrency



Source link: https://dailycoin.com/the-u-s-government-unveils-new-crypto-tax-reporting-rules/

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