According to a statute passed by Congress in November 2021, the new crypto guidelines were to be released.
- The US Treasury Department has decided to postpone until further notice the implementation of a significant set of crypto tax reporting regulations.
- According to the November 2021-passed Infrastructure Investment and Jobs Act, the regulations were meant to take effect in the 2023 tax filing year.
Delayed Tax Reporting Rules
The Internal Revenue Service (IRS) must create a uniform definition of a “cryptocurrency broker” following the new legislation, and any company that satisfies this description must provide each customer with a Form 1099-B that includes information on their trade earnings and losses. The IRS must also receive this same information from these businesses so that it is aware of the trading-related income of clients.
The infrastructure bill was voted into law more than a year ago, but the IRS has yet to define a “crypto broker” or produce standard forms for these businesses to use when filing the reports.
Treasury Department’s Infrastructure Bill
On December 23, the Treasury Department announced that it would draft such regulations. Part of it reads: “The Department of the Treasury and the IRS propose to implement section 80603 of the Infrastructure Act by publishing rules that address the application of sections 6045 and 6045A to digital assets and provide forms and instructions for broker reporting.
The proposed regulations and their explanation will be included in a notice of proposed rulemaking that includes a call for public comment and the date of a public hearing. Through this approach, the Treasury Department and the IRS can solicit comments from affected taxpayers, companies, and other interested parties, enabling the public to participate actively in the regulatory process. The public hearing evidence and comments will be carefully reviewed before the final regulations are published.”
Until the Treasury Department and the IRS adopt new final regulations per section 80603 under section 6045, a broker may, as of December 23, 2022, report gross proceeds and basis per the requirements of existing law and regulations. Additionally, starting on December 23, 2022, a broker may furnish statements on covered security transfers following the law and regulations in effect until the Treasury Department and the IRS published new final rules under section 80603 under section 6045A.
Statement for Brokers
The department states that “Brokers will not be required to report or provide additional information concerning dispositions of digital assets under section 6045, to issue additional statements under section 6045A, or to file any returns with the IRS on transfers of digital assets under section 6045A(d) until the new final regulations under sections 6045 and 6045A are issued.”
The Treasury must publish proposed regulations and request public feedback on the issues. It is then that industry players make their mark on the regulatory environment and educate the regulators on the complexities of the digital asset arena, hopefully leading to a more practical and functional tax code.
Taxpayers (clients) must still abide by the crypto tax regulations, nevertheless. The blockchain sector has debated the crypto tax laws ever since they were initially put forth. According to critics, the broad term “broker” in the law might be used to target Bitcoin miners, who are likely to be unable to abide by the reporting requirements.