The Internal Revenue Service (IRS) has said that it would accept comments until January 25, 2024, regarding the rules for crypto tax reporting.
Published on October 19, the proposed rule seeks to put into effect the terms of the American Families Plan Act of 2023, which President Joe Biden signed into law in August.
According to the rule, taxpayers and the IRS would get reports on transactions involving digital assets valued at more than $10,000 from crypto exchanges and other intermediaries.
In addition, the legislation would mandate that cryptocurrency companies keep track of their clients’ transactions and confirm their identities. The goal of the regulation is to stop money laundering and other illegal acts while improving tax compliance and transparency in the cryptocurrency industry.
However, the crypto sector and its supporters have also voiced criticism and concerns about the rule, claiming it is unduly burdensome, ambiguous, and wide.
They contend that the regulation will violate people’s right to privacy and civil freedoms, hinder innovation and growth in cryptocurrency, and place users and businesses at undue danger and expense.
The definition of digital assets, which includes not only cryptocurrencies but also non-fungible tokens (NFTs), stablecoins, and decentralized finance (DeFi) products, as well as the scope of reporting entities—which includes not only exchanges but also peer-to-peer platforms, wallets, miners, and validators—as well as the $10,000 threshold and the absence of clear instructions on how to put the rule into practice are some of the concerns brought up by the cryptocurrency community.
The IRS stated that in response to the “significant number of comments” it received from various stakeholders, including people, companies, trade associations, advocacy groups, legislators, and regulators, it chose to extend the comment period by 60 days.
Before releasing the final rule, the IRS said it would carefully review “all comments on all aspects of the proposed regulations” received. The IRS’s decision coincides with increased regulatory examination of the cryptocurrency industry on a global scale as nations look to handle the benefits and problems presented by this developing technology.
According to the IRS, it collaborates extensively with international organizations and colleagues in other nations to guarantee a “consistent and coordinated approach” to crypto taxation.
