While there has been a rising urgency and demand for Crypto regulation in the United States, there seems to be more delta.
As per a recent notice, a key set of crypto tax reporting rules is being delayed until further notice under a new decision by the United States Treasury Department. The tax reporting rules were supposed to be effective in the 2023 tax filing year in accordance with the Infrastructure Investment and Jobs Act, passed in November last year.
Sources reveal that the new law expects the definition of what a “cryptocurrency broker” is from the Internal Revenue Service (IRS). The IRS is the revenue service of the United States federal government, which is responsible for collecting U.S. federal taxes and administering the Internal Revenue Code, the main body of the federal statutory tax law.
Any business or firm that classifies under this definition must issue a Form 1099-B to each customer detailing their profits and losses from trades. It also requires these listed firms to provide this information to the IRS so that it would be aware of customers’ income trading, thus enhancing transparency.
Reportedly, it’s been more than a year since the infrastructure bill became law, but the IRS hasn’t accomplished what it was supposed to do. For example, it has not published the definition of “crypto broker,” nor has it created standard forms for these firms to make the reports.
On Friday, the Treasury Department released a statement stating that both organizations are looking forward to implementing the Infrastructure Act, addressing certain sections’ applications to digital assets, and giving clarity over broker reporting. The statement read:
“The Department of the Treasury (Treasury Department) and the IRS intend to implement section 80603 of the Infrastructure Act by publishing regulations specifically addressing the application of sections 6045 and 6045A to digital assets and providing forms and instructions for broker reporting.
It also stated that the final publishing of the regulations would be done after carefully “considering all the public comments received as well as the testimony at the public hearing.”
Additionally, the notice also stated that currently, the brokers don’t need to comply with the new crypto tax provisions and publish additional information regarding digital assets. The notice stated:
“Brokers will not be required to report or furnish additional information with respect to dispositions of digital assets under section 6045, or issue additional statements under section 6045A, or file any returns with the IRS on transfers of digital assets under section 6045A(d) until those new final regulations under sections 6045 and 6045A are issued.”
Nonetheless, the taxpayers (customers) would still be required to comply with the crypto tax provisions. The tax provisions have been controversial in the blockchain industry since their inception.
Some have argued that the broader definition of the “broker” under the laws could harm the miners. For example, the definition could be used to attack miners, who will likely be unable to comply with reporting provisions.