The US Department of Treasury and the Internal Revenue Service (IRS) have announced proposed rules for the handling of digital assets and the sale and exchange of crypto.
In a public statement, the two federal entities said the move was an effort to “crackdown on tax cheats” while making it easier for taxpayers to know what they must pay on the transactions.
The statement explains that 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. As proposed a new form, 1099-DA, will be utilized to file to the feds regarding taxes on digital asset transactions. Brokers, or platforms enabling digital asset transactions, would be required to report any sales of digital assets starting in 2026 for transactions taking place in 2025.
The 282-page document with the new regulations is available here.
The Chairman of the House Financial Services Committee, Patrick McHenry, slammed the proposal as another attack on digital asset innovation. McHenry stated:
“The notice of proposed rulemaking on digital asset reporting requirements is another front in the Biden Administration’s ongoing attack on the digital asset ecosystem,” said Chairman McHenry. “Following the passage of the Infrastructure Investment and Jobs Act, numerous lawmakers of both parties made clear that any proposed rule must be narrow, tailored, and clear. I’m glad to see the delayed effective date and exemptions for other activities in the proposed rule mirror my bipartisan bill, the Keep Innovation in America Act. However, it fails on numerous other counts. Any additional rulemakings related to the other sections from the law must adhere to Congressional intent.”
Representative McHenry said the Biden Administration is attempting to kill the digital asset ecosystem, demanding that the Administration work with Congress to craft new rules.
“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 U.S.”
McHenry and Representative Ritchie Torres have co-sponsored HR 1414, the Keep Innovation in America Act, to create bright-line regulations for the digital asset industry. Torres is a Democrat supporting the bill.
Comments on the proposed rules will be accepted until October 30, 2023. A public hearing is scheduled for November 7th and 8th.
