The reporting requirements, intended to reduce the size of the tax gap, were scheduled to go into effect in January 2023, with crypto firms submitting reports to the IRS beginning in 2024.
The provision of the US infrastructure bill enacted in November 2021, which will require financial institutions and cryptocurrency brokers to provide additional information, could be delayed.
According to a Wednesday note from Bloomberg citing people familiar with the matter, the US Treasury Department and the Internal Revenue Service may be unwilling to enforce crypto brokers’ collection of information on certain transactions beginning in January 2023. The possible delay could apparently affect billions of dollars related to capital gains taxes – the Biden administration’s budget for the government for the fiscal year 2023 previously estimated that modifying the Cryptocurrency tax rules could reduce the deficit by roughly $11 billion.
Infrastructure Bill Details
Under the current infrastructure bill, section 6050I mandates that cryptocurrency brokers handling digital asset transactions worth more than $10,000 report them to the Internal Revenue Service with personal information likely to include the name of the sender, their date of birth, and your social security number. The requirements, intended to reduce the size of the tax gap, were scheduled to go into effect in January 2023, with companies submitting reports to the IRS beginning in 2024.
“Delaying is smart,” said Jake Chervinsky, chief policy officer for the Blockchain Association, in response to the news. “We’re getting closer & closer to the effective date of the infrastructure bill’s tax provisions & we’re still waiting for guidance or rulemaking on implementation. We’ve also seen legislative proposals that could make big changes.”
Some Reactions of the Community
“IRS and Treasury are likely to delay new reporting rules for crypto brokers, according to people familiar who asked not to be named because a final decision hasn’t been made. The move would push back efforts to collect billions in taxes from traders,” posted a response on Twitter reporter covering crypto regulation for Bloomberg Business, Ally Versprille.
@_GoblinCrypto, a goblin writing about the latest happenings in Goblin Town, posted a contrasting view of the matter, “Bloomberg: The IRS is giving relief to tax cheats! Reality: The IRS doesn’t want to see (or deduct) your depressing losses.”
What has happened so far
Since the passage of the trillion-dollar infrastructure bill, many industry experts and legislators have suggested that broker disclosure requirements are too broad, placing an undue burden on people who may not have the necessary information about the transactions. In June, cryptocurrency advocacy group Coin Center filed a lawsuit against the Treasury Department, claiming that the tax information requirement could “impose a massive surveillance regime on ordinary Americans.”
By Audy Castaneda
