The U.S. Treasury and the IRS have proposed new reporting requirements for digital asset brokers like cryptocurrencies and NFTs in an attempt to “crack down on tax cheats” and help citizens assess tax dues arising from such asset transactions.
Regulations “would require brokers of digital assets to report certain sales and exchanges,” the U.S. Treasury said in an Aug. 25 press release. The proposed regulations “is part of a broader effort at Treasury to close the tax gap, address the tax evasion risks posed by digital assets, and help ensure that everyone plays by the same set of rules.”
Brokers would be required to report on the sale and exchange of digital assets in 2026 for activities that took place during the prior year.
In an Aug. 25 press release detailing the new proposed regulations, IRS Commissioner Danny Werfel said that a critical part of the rules is that it “fits in with the larger IRS compliance focus on wealthy taxpayers.”
“We need to make sure digital assets are not used to hide taxable income, and the proposed regulations are designed to provide a clearer line of sight into activities by high-income people as well as others using them,” he said.
“We want to make sure everyone pays what they owe under the tax laws, and our research and experience demonstrate that third-party reporting improves compliance.”
A Barclays analysis released last year estimated that the IRS could be missing out on more than $50 billion annually due to crypto traders not paying their taxes.
The new rules will also help taxpayers in filing their returns, the Treasury stated.
Under current laws, citizens owe tax on gains made on the sale or exchange of digital assets and can deduct losses on such activity. However, “for many taxpayers it is difficult and costly to calculate their gains.”
The proposal would require that digital asset brokers “provide a new Form 1099-DA to help taxpayers determine if they owe taxes, and would help taxpayers avoid having to make complicated calculations or pay digital asset tax preparation services in order to file their tax returns.”
“These regulations align tax reporting on digital assets with tax reporting on other assets, and, as a result, avoid preferential treatment between different types of assets,” the treasury stated.
The agency cited figures from the Joint Committee on Taxation (JCT) which estimated that the new rules could raise almost $28 billion in revenues for the government over a decade.
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