The U.S. Treasury Department has finalised a regulation mandating that cryptocurrency brokers—including exchanges and payment processors—report to the Internal Revenue Service any updates regarding users' sales and swaps of digital assets.
The new regulations, which are a result of the $1 trillion bipartisan 2021 Infrastructure Investment and Jobs Act, are intended to crack down on cryptocurrency users who could be neglecting their taxes. It was projected that the new regulations may generate around $28 billion in revenue over a ten-year period at the time the measure was approved.
The regulation would link cryptocurrency tax obligations with the current tax reporting rules for brokers of other financial products, such as bonds and stocks, and will be phased in beginning with the 2026 tax filing season, Treasury said.
Treasury officials stated that the final regulation was changed from the initial plan to reduce some costs on brokers and to roll in the new requirements gradually. Additionally, it has a $10,000 reporting requirement for transactions using stablecoins, a class of cryptocurrency token that is usually linked to an asset like the US dollar.
After Treasury proposed the regulation last year, the cryptocurrency sector launched a campaign of comment letters, claiming that the rules infringed on the privacy of bitcoin owners and that the proposal's definition of a broker was too wide.
Treasury reported that it had gone over more than 44,000 comments on the plan. Additionally, it stated that it plans to release more regulations later this year that would impose tax reporting obligations on non-custodial brokers, such as decentralised cryptocurrency exchanges.
The second-largest cryptocurrency in the world, Ether, was expected to rise for the first time in over two years on Tuesday due to optimism.
In a statement, Treasury noted that taxpayers "have always owed tax on the sale or exchange of digital assets" and that the new regulation "simply created reporting requirements... to help taxpayers file accurate returns and pay taxes owed under current law."
According to the Treasury Department, the regulation creates a new tax reporting form called Form 1099-DA, which is intended to assist taxpayers in determining if they owe taxes and to save cryptocurrency users from having to perform laborious computations to ascertain their earnings.
To help with their tax preparation, brokers would have to transmit the paperwork to digital asset holders as well as the IRS.
Regardless of whether the transactions produced a profit or not, the IRS presently mandates that users of cryptocurrencies declare a variety of digital asset activities on their tax returns. Users must complete the computation on their own, and the digital asset trading platforms do not provide the IRS with such data.
(Source:www.reuters.com)
The new regulations, which are a result of the $1 trillion bipartisan 2021 Infrastructure Investment and Jobs Act, are intended to crack down on cryptocurrency users who could be neglecting their taxes. It was projected that the new regulations may generate around $28 billion in revenue over a ten-year period at the time the measure was approved.
The regulation would link cryptocurrency tax obligations with the current tax reporting rules for brokers of other financial products, such as bonds and stocks, and will be phased in beginning with the 2026 tax filing season, Treasury said.
Treasury officials stated that the final regulation was changed from the initial plan to reduce some costs on brokers and to roll in the new requirements gradually. Additionally, it has a $10,000 reporting requirement for transactions using stablecoins, a class of cryptocurrency token that is usually linked to an asset like the US dollar.
After Treasury proposed the regulation last year, the cryptocurrency sector launched a campaign of comment letters, claiming that the rules infringed on the privacy of bitcoin owners and that the proposal's definition of a broker was too wide.
Treasury reported that it had gone over more than 44,000 comments on the plan. Additionally, it stated that it plans to release more regulations later this year that would impose tax reporting obligations on non-custodial brokers, such as decentralised cryptocurrency exchanges.
The second-largest cryptocurrency in the world, Ether, was expected to rise for the first time in over two years on Tuesday due to optimism.
In a statement, Treasury noted that taxpayers "have always owed tax on the sale or exchange of digital assets" and that the new regulation "simply created reporting requirements... to help taxpayers file accurate returns and pay taxes owed under current law."
According to the Treasury Department, the regulation creates a new tax reporting form called Form 1099-DA, which is intended to assist taxpayers in determining if they owe taxes and to save cryptocurrency users from having to perform laborious computations to ascertain their earnings.
To help with their tax preparation, brokers would have to transmit the paperwork to digital asset holders as well as the IRS.
Regardless of whether the transactions produced a profit or not, the IRS presently mandates that users of cryptocurrencies declare a variety of digital asset activities on their tax returns. Users must complete the computation on their own, and the digital asset trading platforms do not provide the IRS with such data.
(Source:www.reuters.com)