The U.S. Department of the Treasury and the Internal Revenue Service have released final regulations concerning tax reporting requirements for brokers involved in digital asset transactions. These rules are part of the Biden-Harris Administration’s efforts under the bipartisan Infrastructure Investment and Jobs Act.
The new regulations do not introduce additional tax obligations for digital assets but require brokers to report gross proceeds from sales through a Form 1099. This change aims to align digital asset transaction reporting with existing securities and custodial trading platform rules.
Aviva Aron-Dine, performing the duties of Assistant Secretary for Tax Policy, stated, “These regulations will help ensure that all taxpayers play by the same set of rules and have access to the information they need to file their taxes accurately.” She added that aligning tax reporting requirements would make filing easier and cheaper for compliant taxpayers while addressing noncompliance issues.
The regulations follow earlier guidelines primarily targeting custodial brokers. Notably, operators of digital protocols or developers of protocol software are not classified as brokers under these new rules. The modifications aim to reduce burdens on brokers while ensuring necessary information is available to both taxpayers and the IRS.
