The United States Internal Revenue Service (IRS), the agency responsible for tax collection, released proposed regulations on the sale and exchange of digital assets by brokers. Under the rules, brokers would be required to use a new form to report to simplify tax filing and cut down on tax cheating.
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 in order to file their tax returns,” according to a Treasury Department statement. It added:
“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.”
The regulations bring digital asset reporting into line with reporting on other types of assets, the Treasury said.
The draft proposal, set to run in the Federal Register on Aug. 29, is 282 pages long. It is part of the Biden administration’s implementation of the bipartisan Infrastructure Investment and Jobs Act (IIJA), the Treasury said. IIJA provisions are expected to raise $28 billion in new tax revenue over ten years.
The proposed rules would go into effect in 2026 to reflect sales and exchanges carried out in 2025. Written comments on the proposal are being accepted through Oct. 30. At least one public hearing will be held after that date.
Judging from the initial reaction to the proposal, the IRS may have a lot of comments to field. Kristin Smith, CEO of the Blockchain Association, an industry advocacy group, released a statement that said:
“It’s important to remember that the crypto ecosystem is very different from that of traditional assets, so the rules must be tailored accordingly and not capture ecosystem participants that don’t have a pathway to compliance.”
Smith added that the group and its members were looking forward to providing comment.
Reuters quoted DeFi Education Fund CEO Miller Whitehouse-Levine as saying, “Today’s proposal from the IRS is confusing, self-refuting, and misguided. It attempts to apply regulatory frameworks predicated on the existence of intermediaries where they don’t exist.”
Treasury & IRS released proposed regulations on the sale and exchange of digital assets by brokers:https://t.co/u6TewiS7tV
Patrick McHenry, chairman of the House of Representatives Financial Services Committee, called the proposal “another front in the Biden Administration’s ongoing attack on the digital asset ecosystem.”
McHenry also called the proposed rules “misguided,” and said, “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.”
Draft of IRS proposed digital asset broker reporting rules. Source: The Federal Register
McHenry added that he was glad that exemptions in the proposal reflected those in the Keep Innovation in America bill, which he co-wrote with Rep. Ritchie Torres. McHenry said the bill is intended to “fix the poorly constructed digital asset reporting provisions” in the IIJA.
Advocacy group Coin Center weighed in on digital asset taxation a few days earlier in a letter to Sens. Ron Wyden and Mike Crapo. The letter contained suggestions very specifically tailored to digital assets and raised privacy concerns.
The Tornado Cash co-founder is scheduled to go to trial on Monday, but his defense attorneys are still waiting on rulings for motions over witnesses in the case.
The bromance between Sir Keir Starmer and President Macron is so apparent – embraces all around.
This is some deft diplomacy from Sir Keir, who has been love-bombing his French counterpart ever since he became prime minister – trying to get closer ties, be it on security, on trade, and now of course on small boats.
And he has got a win today – he’s got President Macron to agree a deterrent deal.
You remember the Conservatives were trying the Rwanda plan to deter people from coming by sending them back to Rwanda, a third country, if they came here illegally.
What they’re going to do is, if someone arrives here illegally, they will be sent back to France, and in return, the UK will accept a legitimate asylum seeker. It might be someone who has family ties.
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How people smugglers dodge French police
It’s going to start off really small – think of it as a pilot – as they’re going to test it out, see if it works.
It might be just a handful of people being sent back, maybe just under a thousand or so by the end of the year. But they will hopefully, for the prime minister, scale it up and it could become a real deterrent.
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0:46
Farage reacts to UK-France migrant deal
I’ll leave you with just one more thought: As Prime Minister Starmer and President Macron were doing this deal today, Nigel Farage was in the English Channel documenting illegal migrants making that crossing – 79 people being picked up by Border Force, taken off a dinghy and into Dover.
Polling out this morning by Portland suggests four in 10 voters who are planning on going to Reform would go back to Labour if the prime minister tackles small boats and drives down the crossings.
There is a real political imperative for him to try to start to resolve this problem. It’s going to count at the ballot box – immigration is a top-three issue in this country when it comes to voters.