US Treasury Delays Crypto Tax Rules Following Failure to Define What a Crypto Broker is

US Treasury Delays Crypto Tax Rules Following Failure to Define What a Crypto Broker is

The Treasury Department has postponed its decision to impose crypto tax reporting rules for companies after it was unable to provide a standard definition for what a “crypto broker” is.

The U.S Department of Treasury has delayed its decision regarding imposing rules for crypto tax reporting until further notice. According to provisions of the Infrastructure Investment and Jobs Act of 2021, a bill passed by President Joe Biden last November, the rules were supposed to take effect in the 2023 tax filing year.

The law requires the Internal Revenue Service (IRS) — which is the tax authority of the United States, to develop a standard definition of what a “cryptocurrency broker” is. It also requires any businesses that fall under the category to issue a Form 1099-B to customers detailing their profits and losses from trades, and report the information to the federal tax agency so that it will be aware of taxpayers’ incomes from trading.

Form 1099-B is a tax form that needs to be submitted to the IRS by brokerages and exchanges reporting their customers’ gains and losses during a tax year. US taxpayers receive their 1099-B forms already filled out by the companies after calculating their revenue.

US Treasury Delays Crypto Tax Rules Following Failure to Define What a Crypto Broker is

However, more than a year has passed since the infrastructure bill became law and yet the IRS has still not been able to provide a definition as to what a “crypto broker” is, and it also has not created a 1099-B form for crypto asset service providers to report their trading activities and customer incomes. In a statement issued by the Department of Treasury, the federal agency is working with the IRS to finalise the rules as soon as possible.

“The Department of Treasury and the IRS intend to implement section 80603 of the Infrastructure Act by publishing regulations specifically addressing the application of section 6045 and 6045A to digital assets and providing forms and instructions for broker reporting. After careful consideration of all public comments received and all testimony at the public hearing, final regulations will be published,” explained the Treasury Department.

The department also added that until its tax reporting rules are finalised, crypto companies operating in the country will not be required to comply with the provisions of the bill. The brokers do not have to “report or furnish additional information with respect to dispositions of digital assets, or issue additional statements, or file any returns with the IRS on transfers of digital assets.” However, US-based customers of these platforms who are considered taxpayers will still be required to comply with the provisions.

Since they were first proposed, tax provisions for cryptocurrencies have been a controversial topic within the blockchain industry. Pro-crypto advocates have largely argued that under law, the broad definition of a “crypto broker” would likely constitute Bitcoin miners, who will be unable to comply with the tax reporting procedures. Many critics view the bill as a way to phase out the mining industry from the United States, which has been a global hub for crypto mining.

Also Read Russia Postpones Decision on Crypto Mining Bill Until Next Year

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