Tech
US Treasury Department finalizes new cryptocurrency tax reporting rules
(Reuters) – The U.S. Treasury Department finalized a rule on Friday requiring cryptocurrency brokers, including exchanges and payment processors, to report new information about sales and trades of digital assets to the Internal Revenue Service of users.
The new requirements aim to crack down on cryptocurrency users who may fail to pay taxes and stem from the bipartisan $1 trillion Infrastructure Investment and Jobs Act of 2021. At the time of the bill’s passage, it was estimated that the new rules could bring in nearly $28 billion over a decade.
The rule, which will be phased in starting next year for the 2026 tax filing season, will align tax requirements for cryptocurrencies with current tax reporting requirements for brokers of other financial instruments, such as bonds and stocks, the Treasury said.
The final rule has been modified from the Treasury’s original proposal to limit some burdens on brokers and to phase in the new requirements, Treasury officials said. It also includes a $10,000 threshold for reporting transactions involving stablecoins, a type of cryptocurrency token typically pegged to an asset like the U.S. dollar.
The cryptocurrency industry launched a comment letter campaign after Treasury proposed the rule last year, arguing that the scope of the proposal’s definition of a broker was too broad and that the requirements violated the privacy of cryptocurrency holders.
The Treasury said it had reviewed more than 44,000 comments on the proposal. It also said it plans to issue additional rules later this year to establish tax reporting requirements for non-custodial brokers, including decentralized cryptocurrency exchanges.
In a statement, the Treasury stressed that cryptocurrency owners “have always had to pay taxes on the sale or exchange of digital assets” and that the new rule “simply created reporting requirements… to help taxpayers file accurate returns and pay the taxes they owe under current law.”
According to the Treasury Department, the rule introduces a new tax return form called Form 1099-DA, designed to help taxpayers determine whether they owe taxes and to help cryptocurrency users avoid having to make complicated calculations to determine their earnings.
Brokers will need to submit forms to both the IRS and digital asset owners to help them prepare their tax returns.
The IRS currently requires cryptocurrency users to report many digital asset-related activities on their tax returns, regardless of whether the transactions resulted in gain. Users are required to make this calculation themselves, and the platforms on which digital assets are traded do not provide this information to the IRS.
(Reporting by Hannah Lang in New York; Editing by Andrea Ricci)