The United States Internal Revenue Service (IRS) has decided to extend the comment period for the proposed crypto tax reporting rules, which were unveiled on August 29, 2023. This extension allows the public to provide feedback on the regulations until November 13.
Under the proposed rules titled “Gross Proceeds and Basis Reporting by Brokers and Determination of Amount Realized and Basis for Digital Asset Transactions,” brokers will be required to adopt a new reporting form, known as Form 1099-DA. The aim is to simplify tax submissions and minimize tax evasion. This form is designed to assist taxpayers in determining their tax obligations, eliminating the need for complex calculations or costly digital asset tax preparation services. The rules are set to be enforced in 2026, affecting sales and exchanges conducted in 2025.
Crypto Community’s Mixed Reactions to IRS Update
The crypto community’s response to these proposed tax rules has been varied. CEO of DeFi Education Fund, Miller Whitehouse-Levine, criticized the rules as “confusing, self-refuting, and misguided.” Meanwhile, Kristin Smith, CEO of the Blockchain Association, emphasized the distinctions between the crypto ecosystem and traditional finance.
Paul Grewal, Chief Legal Officer at Coinbase, urged the crypto community to actively oppose the Treasury’s proposed regulations. Grewal warned that these rules, if enacted, could disadvantage digital assets and potentially harm the emerging crypto industry.
In contrast, some members of the U.S. Senate, including Elizabeth Warren and Bernie Sanders, are urging the Treasury and the IRS to expedite the implementation of the rule. They expressed dissatisfaction with the two-year delay in enforcing crypto tax reporting requirements and are calling for swift action. The crypto community continues to closely monitor these developments as discussions regarding the proposed regulations unfold.