Today, the U.S. Department of the Treasury and the Internal Revenue Service (IRS) have jointly announced a set of proposed regulations focusing on the sale and exchange of digital assets by brokers. The is part of the broader strategy set forth by the Biden-Harris Administration's bipartisan Infrastructure Investment and Jobs Act (IIJA), in attempt "to close the tax gap, address the tax evasion risks posed by digital assets, and help ensure that everyone plays by the same set of rules."
"These proposed regulations would require brokers, including digital asset trading platforms, digital asset payment processors, and certain digital asset hosted wallets, to file information returns, and furnish payee statements, on dispositions of digital assets effected for customers in certain sale or exchange transactions," said the IRS.
These regulations obligate brokers of digital assets to report the specific sales and exchanges of their customers. The regulations also introduce the requirement for brokers to furnish a new Form 1099-DA, to help users determine if they owe taxes.
The implementation timeline specified in the regulations states that brokers would start reporting information on sales and exchanges of digital assets beginning in 2026, for transactions that occurred during the year 2025. The Joint Committee on Taxation's estimation is that these IIJA provisions could generate nearly $28 billion in revenue over 10 years.
The Treasury Department and the IRS are actively soliciting feedback from affected taxpayers, industries, and other stakeholders on the proposed regulations. Written comments will be accepted until October 30, 2023, and the agencies have scheduled a public hearing on November 7, 2023, with a potential follow-up session on November 8, 2023, if the demand necessitates it.
Source: Bitcoin Magazine - Bitcoin News, Articles and Expert Insights
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