In response to the widespread interest and concern generated by its proposed crypto reporting regulations, the Internal Revenue Service (IRS) has decided to extend the comment period by an additional two weeks.
This move grants stakeholders more time to express their opinions, with the new deadline of November 13, 2023. Previously, stakeholders were required to submit comments on the proposed regulations by October 30, 2023.
IRS Grants Extra Time for Public Input
The Treasury and IRS have announced an extension of two weeks for the comment period on its proposed crypto reporting regulations. This update, announced in an Oct. 25 Federal Register document, allows stakeholders more time to provide feedback.
The final date for feedback has been extended to mid-November in response to the rule’s significant public interest since its August announcement.
The proposed regulations focus on defining “brokers” in the crypto industry, including trading platforms, payment processors, digital asset-hosted wallet providers, and individuals who redeem digital assets they create or issue.
Notably, individual miners and validators in the crypto industry are relieved as they are exempted from being classified as “brokers.” However, if adopted, the proposed rules would impose additional compliance requirements on crypto companies, causing concerns among industry participants.
Lawrence Zlatkin, the Vice President of Tax at Coinbase, expressed his concerns about the proposed regulations, describing them as “incomprehensible and unduly burdensome” due to the new reporting requirements they would impose.
He also pointed out the potential data overload the IRS could face, including transactions with “zero or negligible taxable income” under the proposed rules.
The Proposed Crypto Reporting Regulations
On August 25, 2023, the Department of the Treasury and the Internal Revenue Service introduced proposed regulations to improve clarity and compliance for digital asset taxation.
IRS Commissioner Danny Werfel emphasized that these regulations aim to eliminate confusion, establish clear reporting guidelines, and promote compliance with tax laws.
Additionally, he highlighted the significance of preventing the misuse of digital assets to conceal taxable income, especially among high-income individuals.
Under the proposed regulations, crypto brokers must adhere to the same regulatory standards as securities brokers. This includes filing information returns and providing payee statements for all customers and traders.
Furthermore, the Treasury is proposing the introduction of a new Form 1099-DA, designed explicitly for reporting non-employment income from digital assets to customers and clients. This measure aims to assist taxpayers in effectively managing their tax obligations, providing them with a clearer understanding of their digital asset-related tax liabilities.