The sales and exchanges carried out in 2025 are expected to be impacted by the proposed regulations when they take effect in 2026.
The time for comments on the proposed August 2023 crypto tax reporting rules has been extended by the Internal Revenue Service (IRS) of the United States. The deadline for the public consultation is November 13.
August 29 was the date of public release of the rules pertaining to “Gross Proceeds and Basis Reporting by Brokers and Determination of Amount Realised and Basis for Digital Asset Transactions.” Brokers will be required by the regulations to implement a new reporting form in order to expedite tax returns and lower the number of cases of tax evasion.
U.S. Treasury Department officials stated that the proposed Form 1099-DA would “help taxpayers determine if they owe taxes, and avoid having to make complicated calculations or pay digital asset tax preparation services to file their tax returns.” The suggested regulations will affect transactions and sales made in 2025 and go into force in 2026.
The proposed tax regulations were not well received by the cryptocurrency community. CEO Miller Whitehouse-Levine of the DeFi Education Fund referred to them as “confusing, self-refuting, and misguided,” and CEO of the Blockchain Association Kristin Smith emphasised the distinctions between the traditional finance system and the cryptocurrency ecosystem.
Chief Legal Officer Paul Grewal of Coinbase, the cryptocurrency exchange, called on the cryptocurrency community to get involved in the opposition to the Treasury’s planned regulations.
If the regulations become law, he added, it would put “digital assets at a disadvantage and threaten to harm a nascent industry when it’s just getting started.“
Senate members have meanwhile urged the IRS and the Treasury to move forward with a rule “as swiftly as possible.” The implementation of crypto tax reporting requirements has been delayed for two years, as criticised by Elizabeth Warren, Bernie Sanders, and five other senators.