US Wants “Brokers” to Oversee Taxpayers’ Crypto Reporting Process

<p>The US
Department of Treasury alongside the Internal Revenue Service (IRS) today
(Friday) announced new proposed rules for 'brokers' such as crypto trading
platforms, crypto payment processors and digital asset wallet providers. The
agency noted that the proposed regulation will require these 'brokers' to
report certain crypto sales and exchange transactions. </p><p>US Aims at Tax Cheats</p><p>In <a href="https://home.treasury.gov/news/press-releases/jy1705" target="_blank" rel="follow">a statement</a>, the Treasury Department noted
that the new regulation is part of its efforts to implement President Joe Biden’s
administration’s Infrastructure Investment and Jobs Act. The goal
of the legislation, which has been signed into law and is known as the
Bipartisan Infrastructure Law, is to improve infrastructure in the United States and
create jobs. </p><p>Specifically,
the 282-page-long <a href="https://public-inspection.federalregister.gov/2023-17565.pdf" target="_blank" rel="follow">proposed regulation</a> is targeted at combating tax
evasion while helping compliant taxpayers determine how much they owe on their digital asset sale or
exchange transactions.</p><p>“Under
current law, taxpayers owe tax on gains and may be entitled to deduct losses on
digital assets when sold, but for many taxpayers, it is difficult and costly to
calculate their gains,” Treasury explained. “These proposed rules require
brokers to provide a new Form 1099-DA to help taxpayers determine if they owe
taxes, and would help taxpayers avoid having to make complicated calculations
or pay digital asset tax preparation services in order to file their tax
returns.”</p><p>Furthermore,
the Treasury explained that the new regulations will help
to subject crypto brokers to the same tax reporting rules followed by those that deal in securities
and other financial instruments. These rules “align tax reporting on
digital assets with tax reporting on other assets, and, as a result, avoid
preferential treatment between different types of assets,” the agency said.</p><p>However, the proposed rules are not expected to come into force until 2016 when crypto brokers
will be required to answer for transactions from the prior year. To continue work on the rules, the Treasury Department and IRS are accepting public comments on them until October 30, 2023.</p><p>Regulation
Meets Resistance</p><p>However,
the new rules have attracted criticism from both the political class and
industry actors. In <a href="https://financialservices.house.gov/news/documentsingle.aspx?DocumentID=408956#:~:text=Patrick%20McHenryChairman&amp;text=“The%20notice%20of%20proposed%20rulemaking,ecosystem%2C”%20said%20Chairman%20McHenry." target="_blank" rel="follow">a statement</a> released on Friday, Patrick McHenry, the Chairman of the US House of Representatives' Financial
Services Committee, picked holes in the proposal, calling it “another front in
the Biden administration’s
ongoing attack on the digital asset ecosystem.”</p><p>“The Biden
Administration must end its effort to kill the digital asset ecosystem in the
US and work with Congress to finally deliver clear rules of the road for this
industry,” McHenry, who took over the Committee from Maxine Waters in January,
stated. </p><p>“I look
forward to advancing my bipartisan solution — the Keep Innovation in America
Act — to fix these misguided reporting requirements, protect the privacy of
market participants, and ensure the digital asset ecosystem can flourish here
in the US,” the Chairman added.</p><p>In a post
on X (formerly Twitter), Miller Whitehouse-Levine, the CEO of DeFi Education,
described the proposal as “confusing” and “self-refuting.” He added that
the rules “strains to find non-existent financial intermediaries in crypto.”</p><blockquote><p lang="en" dir="ltr">Treasury just released a confusing and self-refuting proposal pursuant to a new definition of "broker" passed in August 2021.As feared, it strains to find non-existent financial intermediaries in crypto—including DAOs and certain wallet providers—or to create them… <a href="https://t.co/6D3NJ1UpGJ">https://t.co/6D3NJ1UpGJ</a></p>— Miller (@millercwl) <a href="https://twitter.com/millercwl/status/1695071249448259810?ref_src=twsrc%5Etfw">August 25, 2023</a></blockquote><p>Additionally, Kristin
Smith, the CEO of Blockchain Association, in a
comment published on X emphasized that it is “important to remember that the
crypto ecosystem is very different from that of traditional assets, so the
rules must be tailored accordingly and not capture ecosystem participants that
don’t have a pathway to compliance.”</p><blockquote><p lang="en" dir="ltr">1/ Today, the long-awaited broker rules were released by the Treasury and the IRS. Blockchain Association CEO <a href="https://twitter.com/KMSmithDC?ref_src=twsrc%5Etfw">@KMSmithDC</a> stated: <a href="https://t.co/99dIaxjulM">pic.twitter.com/99dIaxjulM</a></p>— Blockchain Association (@BlockchainAssn) <a href="https://twitter.com/BlockchainAssn/status/1695073453739499926?ref_src=twsrc%5Etfw">August 25, 2023</a></blockquote>

This article was written by Solomon Oladipupo at www.financemagnates.com.