- Biden administration unveils new crypto tax reporting rules

The U.S. Treasury Department has proposed a new rule that would require cryptocurrency brokers to report information on users’ sales and exchanges of digital assets to the Internal Revenue Service (IRS). This rule is part of a larger effort to crack down on crypto users who may be evading taxes. The proposed rule would introduce a new tax reporting form called Form 1099-DA, which would help taxpayers determine if they owe taxes and simplify the process of calculating gains for crypto users. It would also subject digital asset brokers to the same reporting rules as brokers for other financial instruments. The definition of a “broker” would include centralized and decentralized trading platforms, payment processors, and online wallets. The rule would cover cryptocurrencies and non-fungible tokens. Brokers would need to send the forms to both the IRS and digital asset holders. These requirements stem from the 2021 Infrastructure Investment and Jobs Act, which aimed to increase tax reporting requirements for digital asset brokers. The bill estimated that the new rules could generate around $28 billion in revenue over a decade. The Treasury proposed that the rules would be effective for brokers in 2025. The crypto industry had mixed reactions to the proposal, with some seeing it as a way to improve tax compliance and others criticizing it as confusing and misguided. Currently, crypto users are required to report digital asset activities on their tax returns, but the platforms do not provide the IRS with that information. Several Democratic senators, including Elizabeth Warren, have urged the Treasury to implement the rules quickly to address tax evasion in the crypto industry. The Treasury Department and the IRS are accepting feedback on the proposal until Oct. 30 and will hold public hearings on Nov. 7-8.