U.S. Treasury and IRS Collaborate on Proposed Tax Regulations for Digital Assets Sector.
The U.S. Department of the Treasury and the Internal Revenue Service (IRS) have unveiled a joint proposal outlining new tax regulations designed for the digital assets industry.
Outlined in their recent publication, the Treasury and IRS suggest that entities such as payment platforms, wallet providers, and trading firms involved with cryptocurrencies should submit tax returns for specific sales or exchange transactions.
Additionally, the proposal extends to real estate brokers, urging them to report tax-related information concerning virtual currencies received during transactions.
Citing both existing authority and revisions to tax laws within the Infrastructure Investment and Jobs Act, the proposed regulations would mandate brokers—including digital asset trading platforms, payment processors for digital assets, and selected digital asset hosted wallets—to file information returns and provide payee statements. This requirement would pertain to the disposition of digital assets involved in certain sale or exchange transactions for customers.
The proposed regulations also extend to real estate reporting persons who, in the context of reportable real estate transactions, would be classified as brokers. These individuals would need to include the fair market value of digital asset consideration received by real estate sellers on filed information returns and payee statements.
As per an official statement from the Treasury Department, if the proposed rules are enacted, they will be applicable to crypto asset sales and exchanges starting from 2025. These regulations are projected to generate approximately $28 billion in federal government revenue over a span of 10 years.
The introduction of these proposed rules drew criticism from Republican Representative Patrick McHenry of North Carolina, who serves as the Chairman of the House Financial Services Committee. McHenry views the proposal as yet another attempt by the Biden Administration to impose strict regulations on the cryptocurrency industry.
McHenry expressed his perspective, stating, “The Biden Administration needs to halt its endeavor to stifle the digital asset ecosystem in the United States and collaborate with Congress to establish clear regulatory guidelines for this industry. I am eager to promote my bipartisan solution—the Keep Innovation in America Act—which aims to rectify these misguided reporting obligations, safeguard the privacy of market participants, and ensure the growth of the digital asset ecosystem within the U.S.”
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Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.
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