IRS And Treasury Required To Issue Tax Regulations For Cryptocurrency Brokers

Key Points:

• Democrats are urging the IRS and the Treasury Department to issue tax regulations for crypto brokers.
• Lawmakers are referring to the directives elaborated in the bill that was formulated almost 2 years ago.
• Although the White House has approved it, the Treasury Department and the IRS have not yet announced it to the public despite the deadline for implementation.

Democratic US senators signed a letter with Bernie Sanders on Tuesday, urging the IRS and Treasury Department to issue tax regulations for crypto brokers and then do so vigorously.

US Democratic Senators Elizabeth Warren, Bob Casey, and Richard Blumenthal addressed the directives in the Senate’s $1.2 trillion infrastructure bill in August 2021, opening existing tax reporting requirements for businesses operating as crypto brokers including exchanges.

Warren and other senators contend that the need for the adjustment is immediate since crypto users’ yearly losses from tax evasion amount to billions of dollars. The regulations seek to close financial loopholes by requiring significantly more extensive crypto tax reporting.

“Research suggests that crypto tax evaders are cheating the IRS out of at least $50 billion a year – but the figure may be much higher,”

The law appeals.

According to the party members’ argument, given the opportunity, tax evaders and cryptocurrency intermediaries willing to assist them will continue to play games on the system, exploit vulnerabilities and extract billions of dollars every year from the US government.

The lawmakers pointed out that even though the Infrastructure Investment and Jobs Act of 2021 required new reporting requirements for cryptocurrency trading, the White House ended its review in May this year. Still, the Treasury Department and Internal Revenue Service (IRS) have yet to create the rules to implement them, despite a deadline set by Congress later this year. Experts say this is an unusual delay in tax regulations.

“Nearly two years have passed since the law was enact, and the implementation deadline is less than six months away—but Treasury has yet to publish proposed rules,”

The letter read.

If implemented by the Treasury Department, the new rules would require third parties such as Binance and Coinbase to report information about individuals’ cryptocurrency transactions, including gains and losses, to the IRS. This is considered to generate potential legal action for cryptocurrency service providers, especially in this sensitive time Binance and Coinbase are both appearing in SEC and CFTC lawsuits.

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