U.S. Government Delays Enforcement of Crypto Broker Reporting Requirements
According to reports, provisions of the U.S. infrastructure bill signed in November that require financial institutions and crypto brokers to report additional information may be delayed.
The U.S. Treasury Department and Internal Revenue Service may not be willing to impose requirements for crypto brokers to collect certain transaction information starting in January 2023, according to people familiar with the matter, Bloomberg reported Wednesday. The potential delay could reportedly affect billions of dollars related to capital gains taxes — the Biden administration’s fiscal year 2023 government budget previously estimated that changes to the crypto tax law could reduce the deficit by around $11 billion.
Under the current Infrastructure Act, Section 6050I, crypto brokers handling digital asset transactions worth more than $10,000 are required to file reports with the IRS that may include individuals such as the sender’s name, date of birth, and social security number information. The requirements, aimed at reducing the size of the tax gap, were originally scheduled to take effect in January 2023, with crypto companies beginning to report to the IRS in 2024.
“Delay is wise,” said Jake Chervinsky, head of policy at the Blockchain Association, in response to the news. “We are getting closer to the effective date of the tax provisions of the Infrastructure Act and we are still awaiting guidance or rulemaking on implementation.”
Since the passage of the $1 trillion infrastructure bill, many industry experts and lawmakers have argued that reporting requirements for crypto brokerages are too broad and place an undue burden on individuals who may not have the necessary transaction information. In June, cryptocurrency and blockchain advocacy group Coin Center filed a lawsuit against the U.S. Treasury Department, arguing that tax reporting requirements could “impose a regime of mass surveillance on ordinary Americans.”