U.S. Treasury Department Delays Crypto Tax Reporting Rules, IRS Unable to Define What a ‘Broker’ Is

In November 2021, Congress issued an amendment that required the new crypto tax reporting rules to be issued. The crypto rules were delayed until the United States Treasury Department further noticed. The crypto rules were supposed to be implemented in the 2023 tax filing year, according to the Infrastructure Investment and Jobs Act passed in November 2021.

About Form 1099-B

The new law demands that the Internal Revenue Service (IRS) introduce a standard definition of what a “cryptocurrency broker” is, and if any organization falls under the conditions of the definition is required to provide a Form 1099-B to all the customers, which briefly describes their profits and losses from their trades. 

It is also necessary for the organization to provide the same information to the IRS so that the IRS also knows how much customers have earned from trading through the organization.

The infrastructure has become law for more than twelve months, but the IRS has not defined a “crypto broker” or developed a standard form for businesses at least to use in building a report. The Treasury Department stated on December 23 that it would introduce some rules soon.

The Treasury Department addresses, “The Department of the Treasury (Treasury Department) and the IRS intend to implement section 80603 of the Infrastructure Act by publishing regulations specifically addressing the application of sections 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.”

It has also stated that the brokers are not required to follow the newly updated amendment. Still, the customers have to follow the tax rules stating, “Brokers will not be required to report or furnish additional information with respect to dispositions of digital assets under section 6045, or issue additional statements under section 6045A, or file any returns with the IRS on transfers of digital assets under section 6045A(d) until those new final regulations under sections 6045 and 6045A are issued.”

These crypto tax rules were the most controversial discussion in the crypto industry when it was first introduced. The discussing parties raised concerns that the broker definition under the amendment can be used to attack Bitcoin miners who cannot obey the reporting rules.