2023-8-26 19:36 |
On Friday, the US Department of the Treasury and the Internal Revenue Service (IRS) released proposed regulations for the sale and exchange of digital assets by brokers.
The regulations are part of the federal government’s attempt to crack down on tax evasion while helping taxpayers report what they owe on digital asset transactions. The proposed rules are open for public comment and feedback until October 30.
The Proposed Changes Could Make Americans’ Crypto Taxes More AccurateThe rules would require brokers of digital assets to report certain sales and exchanges. This aligns tax reporting on digital assets with securities and other financial instruments.
Under the new rules, crypto exchanges like Coinbase will be required to report customers’ digital asset transactions and cost basis to the IRS.The draft regulations will also require more work from crypto exchanges with an official US presence, like Coinbase or Kraken. Starting in 2026 for 2025 taxes, exchanges must send Form 1099s showing gross proceeds from crypto transactions.
Further down the line, they will report customers’ cost basis—or how much they paid for the assets.
Learn more about how crypto taxes work in the United States: The Ultimate US Crypto Tax Guide for 2023
Some platforms already report proceeds to the IRS. But without the cost basis, the IRS may see all proceeds as profit.
Hence the tax collectors may send letters seeking more taxes than people owe. The proposed rules aim to prevent this and ensure fairer and more accurate tax calculations.
Federal Authorities Will Consider Feedback Until October 30The proposed changes are mandated by the bipartisan Infrastructure Investment and Jobs Act of 2021. The act aims to close the tax gap and address risks posed by digital assets. Standardized third-party reporting also reduces evasion and improves accuracy, noted the Joint Committee on Taxation.
The Treasury and IRS have scheduled public hearings for public comment on November 7 and 8. They will consider feedback before issuing final rules.
The US federal government has good reason to be concerned. In April, crypto tax firm Divly revealed few investors pay taxes on cryptocurrency.
Divly’s 2022 Global Cryptocurrency Taxation Report analyzed taxpayers who declared crypto to authorities. The report found only 0.53% of cryptocurrency investors worldwide declared crypto activity in 2022 tax filings.
Overall, Divly revealed, the United States has the tenth highest crypto tax payment rate out of 24 countries analyzed. However, the report also said US tax compliance rates on crypto had doubled since 2018.
The post US Government Releases New Proposals for Crypto Taxes appeared first on BeInCrypto.
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