The Treasury Department and the Internal Revenue Service have extended the deadline for submitting comments on their proposed crypto regulations by two weeks.
The Treasury Department has decided to extend the comment period for its proposed new crypto reporting guidelines by two weeks. Interested parties now have until mid-November to submit their comments to the tax authority.
According to a Federal Register document expected to be published on Oct. 25, the Treasury and Internal Revenue Service have extended out the comment deadline in response to the “strong public interest” in the rule since it was first suggested in August.
The proposed rule, which was published in late August 2023, proposes defining digital asset “brokers” as “trading platforms, digital asset payment processors, certain digital asset hosted wallet providers, and persons who regularly offer to redeem digital assets that were created or issued by that person.”
Notably, and much to the pleasure of many industry members, the authorities exempt individual miners and validators from the “broker” label. Nonetheless, if implemented, the laws will impose more duties on crypto firms, which many industry participants find concerning.
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“The proposed regulations, as written, would impose an incomprehensible and unduly burdensome set of new reporting requirements,” Coinbase’s vice president of tax Lawrence Zlatkin wrote earlier this month in a comment letter.
According to Zlatkin, the IRS will be “bombarded with data,” including insignificant transactions with “zero or negligible taxable income.”
The new rules require crypto brokers to follow the same rules as securities brokers, including as filing information returns and providing payee statements to all customers and traders.
In an effort to assist taxpayers in managing their tax obligations, the Treasury is also requesting that brokers give a new Form 1099-DA, a unique form for reporting non-employment income from digital assets, to all customers and clients.
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According to Carlo D’Angelo, a crypto criminal defense attorney, the rules place enormous strain on firms. According to him, investors and clients should be aware that these restrictions would have an influence on their data.
“As currently drafted, these proposed regulations require consumers to disclose sensitive personal identifying information to any qualifying digital asset broker in order to effectuate a digital asset transaction,” D’Angelo wrote in his response to the proposal. “These digital asset brokers — who fall outside the scope of traditionally regulated securities brokers — would then be required to collect, store, and pass on that KYC (know your customer) information to the IRS in the form of a special 1099-DA reporting form.”
As part of President Biden’s Infrastructure Investment and Jobs Act, the Treasury and IRS were ordered in 2021 to write crypto regulations.
The public hearing on November 7 will go forward as planned, and if there is enough interest, a second hearing will be held on November 8. Requests to speak at the hearing must be received via email by October 30, according to the agency.
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