The IRS introduced new potential regulations on digital asset reporting.
The Internal Revenue Service (IRS) published a report on proposed regulations regarding information reporting for certain digital asset sales and exchanges.
According to proposed regulations, brokers, “including digital asset trading platforms, digital asset payment processors, and certain digital asset hosted wallets,” would be required to report new information on sales and exchanges of digital assets of users.
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The new regulations are open for public comment and feedback until October 30th. A public hearing on this regulation has been scheduled for November 7th, 2023.
The new proposed regulations should reportedly serve as “an effort to crack down on tax cheats while helping law-abiding taxpayers know how much they owe on the sale or exchange of digital assets.” It should also help the government address tax evasion involving digital assets.
The proposed regulations would clarify and adjust the rules regarding the tax reporting of information by brokers, so that brokers for digital assets are subject to the same information reporting rules as brokers for securities and other financial instruments.
The new proposed rules would introduce a new Form 1099-DA that brokers would be required to supply to taxpayers to determine if they owe anything to the IRS, as well as eliminate complicated calculations regarding assets.
Brokers would first need to report this new information on digital assets in 2026 and the information related to sales and exchanges in 2025. According to the Joint Committee on Taxation (JCT), the new provisions should raise $28bn in ten years.
This is part of an ongoing effort to establish more regulation surrounding the crypto industry. Earlier this month, the IRS had imposed taxation rules on crypto-mining.
