The Treasury Department (“Treasury”) and the Internal Revenue Service (“IRS”) are likely to delay a January date for crypto brokers and exchanges to begin tracking and reporting data such as customers’ capital gains and losses. The move will delay when the IRS receives the same kind of data from crypto transactions as it receives for stocks and bonds.
Crypto tax evasion remains a major issue for Washington policymakers even with the recent downturn in the market. The Treasury and the IRS have struggled to draft rules for firms to use in collecting and reporting the information on their customers’ trades.
Under a law passed by Congress in November 2021, crypto firms were to begin recording their customers’ detailed transaction data starting at the beginning of 2023 with the reports being sent to the IRS and investors the following year. Once rules are in place, exchanges and brokerages will have to send the detailed transaction reports to the IRS and their customers who made trades which would then be used in filing their taxes. The goal is for the information provided on crypto transactions to be similar to the annual tax statements received for brokerage accounts.
In addition to the reporting rules, Treasury and the IRS are working on a new form for crypto firms to use called the 1099-DA, which will be different from the 1099-B used by stock and bond brokers. The government is planning on releasing a draft of the form in the coming months.
Klug Counsel PLLC and its team of crypto lawyers have represented multiple domestic and cross-border crypto funds and crypto mining ventures in providing tax-efficient structuring that involved equipment worth hundreds of millions of dollars.