The US Government Proposes Regulations for Crypto Taxes
The US Department of the Treasury and the IRS have released proposed regulations for the sale and exchange of digital assets by brokers. The aim is to crack down on tax evasion and improve accuracy in reporting crypto transactions. Here are the key points:
- Brokers will be required to report certain sales and exchanges of digital assets, aligning tax reporting with securities and financial instruments.
- Exchanges like Coinbase will need to report customers’ transactions and cost basis to the IRS.
- Starting in 2026, exchanges must send Form 1099s showing gross proceeds from crypto transactions.
- The rules aim to prevent the IRS from considering all proceeds as profit, ensuring fairer tax calculations.
- The proposed changes are part of the Infrastructure Investment and Jobs Act and are open for public comment until October 30.
The US government is concerned about tax evasion in the crypto space. A report by Divly found that only 0.53% of cryptocurrency investors worldwide declared their crypto activity in tax filings. However, the compliance rate in the US has doubled since 2018. The Treasury and IRS will consider feedback before issuing final rules.
Hot Take: Crypto Tax Regulations Aim to Improve Reporting and Prevent Evasion
The proposed regulations for crypto taxes in the US are a step towards ensuring accurate reporting and preventing tax evasion. By requiring brokers to report transactions and cost basis, the IRS will have better visibility into crypto activity. This will help in closing the tax gap and addressing the risks associated with digital assets. While some may find the regulations burdensome, they are necessary to ensure fair taxation and improve compliance rates. It remains to be seen how the feedback from the public hearings will shape the final rules, but it is clear that the US government is taking crypto taxes seriously.
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