Crypto investors and their brokerages are eagerly awaiting a U.S. tax rule that will completely overhaul how they report their cryptocurrency taxes. Despite prominent lawmakers clamoring for the Treasury Department to finish the job, the government has yet to offer any straight answers about the holdup. “We’re begging for these, because we want to know what we need to report, so we want to comply,” said Cody Carbone, who leads the policy team at the Chamber of Digital Commerce.
When the proposed rule is issued, it will govern how crypto firms report information about customers’ tax positions, similar to traditional brokerages’ filings of 1099 forms that outline gains and losses. The 2021 law that mandates this rule – the Infrastructure Investment and Jobs Act – also called for a reporting requirement to fully identify people making crypto transactions worth more than $10,000.
“We shouldn’t be in a cloud of uncertainty,” said Lawrence Zlatkin, head of the tax arm at Coinbase Inc. (COIN). “Since our customers should be reporting crypto activity on their tax returns anyhow, we should be transparent and be able to give them the information so they can report it properly.”
The Treasury Department has assured the industry that it is working diligently to issue the regulations soon, but the White House has yet to comment on the delay. U.S. lawmakers have also urged the Treasury Secretary and IRS Commissioner to act swiftly to implement strong tax reporting rules for cryptocurrency brokers.
The industry is hoping that the new tax rules will be finalized in time for the 2024 filings, but some are not optimistic. “It’s not realistic to think that these rules are going to be effective by Jan. 1, 2024,” said Coinbase’s Zlatkin.