• The US Treasury and IRS have proposed new tax regulations for the digital assets industry.
• The proposal would require payment platforms, wallet providers, trading firms and real estate brokers to file tax information on certain sales or exchange transactions.
• If enacted, these rules are estimated to generate $28 billion in revenue for the federal government over 10 years.
U.S Treasury and Internal Revenue Service Propose New Crypto Tax Regulations
The U.S Department of the Treasury and Internal Revenue Service (IRS) are jointly proposing new tax regulations for the digital assets industry as part of their publication. These proposed regulations would require payment platforms, wallet providers, trading firms and real estate brokers to file information returns on certain sale or exchange transactions involving virtual currencies received as consideration in reportable real estate transactions. If enacted, these rules are estimated to generate $28 billion in revenue for the federal government over a 10-year period.
Proposed Regulation Details
The proposed regulations would apply to any dispositions of digital assets affected for customers in certain sale or exchange transactions including:
• Brokers such as digital asset trading platforms, payment processors and hosted wallets must file information returns and furnish payee statements
• Real estate reporting persons who are treated as brokers with respect to reportable real estate transactions must include fair market value of digital asset consideration received by sellers in those transactions on filed information returns and furnished payee statements
Criticism of Proposed Regulation
Republican Representative Patrick McHenry from North Carolina is critical of the proposal believing it is just another way for the Biden Administration to crack down on the crypto industry. He wishes the Biden Administration would work with Congress instead “to finally deliver clear rules of the road” that protect privacy while allowing innovation within this sector flourish in America.
When Will Regulations Take Effect?
If approved, these proposed regulations will take effect in 2025 when they will be applied to sales or exchanges involving crypto assets.
Conclusion
The Treasury Department’s proposal has been met with criticism by some members of Congress who believe this could stunt innovation within this sector if not handled properly. However, if implemented, it could bring an influx of taxable revenue into federal coffers totaling approximately $28 billion over a 10-year period beginning in 2025.