US Treasury and IRS finalize new cryptocurrency tax reporting rules – DL News

The U.S. Treasury has finalized new rules requiring cryptocurrency brokers — including exchanges and payment processors — to report digital asset sales and transactions to the Internal Revenue Service in a bid to curb cryptocurrency tax evasion.

The final regulations reflect consideration of more than 44,000 public comments on the proposed regulations, the IRS said in a news release.

The IRS believes that the reporting requirements should enable taxpayers to file accurate tax returns for digital asset transactions that are taxable under applicable law.

“This legislation is an important part of a broader tax compliance effort for high-income earners,” said IRS Commissioner Danny Werfel. “We must ensure that digital assets are not used to hide taxable income, and these final regulations will improve the detection of noncompliance in the high-risk digital asset space.”

Cryptocurrency transactions will be reported two years in advance on the soon-to-be-released Form 1099-DA, reflecting calendar year 2025.

Earlier this month, the Chamber of Digital Commerce pointed out the need to simplify the form and also drew attention to issues related to individual privacy.

The final regulations implement reporting requirements contained in the Infrastructure Investment and Jobs Act, which was enacted in 2021.

The regulations do not include reporting requirements for decentralized or non-custodial brokers that do not take ownership of digital assets; they will be covered by different regulations, the IRS said.

In addition to broker reporting rules, the regulations provide official guidance to taxpayers on determining their basis, gains and losses from digital asset transactions.