The US government needs more time to figure out cryptocurrency broker tax rules
By Bob Garcia
Uncle Sam hasn’t quite figured out how to lay down the law on cryptocurrency taxes
A key set of crypto tax reporting rules will face some delays under a decision made by the U.S. Treasury Department. It was initially believed that the rules would go into effect in the fiscal year 2023, in accordance with the Infrastructure Investment and Jobs Act passed in November 2021. However, it now appears that the process has run into several hurdles as regulators are still unable to define exactly how to define a broker.
Under the new law, the Internal Revenue Service (IRS) is required to develop a standard definition of what a “cryptocurrency broker” is, and any business that fits this definition must issue a Form 1099-B to each customer detailing their losses and gains from transactions. It also requires these organizations to provide this same information to the IRS so that it is aware of customers’ trading income.
However, it has been over a year since the infrastructure legislation became law. Still, the IRS has failed to publish a definition of what a “cryptocurrency broker” is. As a result, it hasn’t created standard forms for these companies to use when reporting. In a December 23 statement, the Treasury Department says it intends to develop such rules soon,
“The Treasury Department and the IRS intend to implement section 80603 of the Infrastructure Act by publishing regulations that specifically address the application of sections 6045 and 6045A to digital assets and provide forms and instructions for broker reports […] After careful consideration of all public comments received and all testimony at the public hearing, final regulations will be published.”