In November 2021, Congress passed legislation requiring the new crypto rules to be issued.
The United States Treasury Department has decided to postpone a key set of crypto tax reporting rules until further notice. According to the Infrastructure Investment and Jobs Act, which was passed in November 2021, the rules were supposed to take effect in the 2023 tax filing year.
The new law requires the IRS to develop a standard definition of a “cryptocurrency broker,” and any business that falls under this definition must issue a Form 1099-B to each customer detailing their profits and losses from trades. It also requires these firms to provide the same information to the IRS so that it is aware of their customers’ trading income.
However, more than a year has passed since the infrastructure bill was signed into law, and the IRS has yet to publish a definition of a “crypto broker” or create standard forms for these firms to use in filing the reports.
“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,” the Treasury Department says in a Dec. 23 statement. Final regulations will be published after careful consideration of all public comments received and all testimony at the public hearing.”
Meanwhile, the department states that brokers will not be required to comply with the new crypto tax provisions, stating that “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 finalized.”
Taxpayers (customers) will, however, be required to adhere to the crypto tax provisions.
Since they were first proposed, the crypto tax provisions have sparked debate in the blockchain industry. Critics have argued that the law’s broad definition of “broker” could be used to target Bitcoin miners, who will most likely be unable to comply with reporting requirements.
