Written by Hannah Lange
(Reuters) – The U.S. Treasury Department finalized a rule on Friday that would require cryptocurrency brokers, including exchanges and payment processors, to report new information about user sales and exchanges of digital assets to the Internal Revenue Service.
The new requirements are aimed at cracking down on crypto users who may fail to pay their taxes, and stem from the bipartisan $1 trillion Infrastructure Investment and Jobs Act of 2021. At the time the bill passed, estimates suggested the new rules could bring in nearly $28 billion over a decade.
The Treasury Department said the rule, which will be implemented in phases starting next year for the 2026 tax filing season, aligns tax requirements for cryptocurrencies with existing tax reporting requirements for intermediaries of other financial instruments, such as bonds and stocks.
The final rule was modified from the Treasury Department’s original proposal in order to reduce some of the burdens on brokers and implement the new requirements in phases, Treasury officials said. It also includes a $10,000 minimum for reporting transactions involving stablecoins, a type of cryptocurrency typically tied to assets like the US dollar.
The cryptocurrency industry launched a comment letter campaign after the Treasury Department proposed the rule last year, arguing that the scope of the proposal’s definition of intermediary was too broad and that the requirements violated the privacy of cryptocurrency owners.
The Treasury Department said it reviewed more than 44,000 comments on the proposal. It also said it expects to issue additional rules later this year to set tax reporting requirements for non-custodial intermediaries, including decentralized cryptocurrency exchanges.
In a statement, the Treasury Department asserted that cryptocurrency owners “have always owed taxes on the sale or exchange of digital assets” and that the new rule “simply created reporting requirements… to assist taxpayers in filing accurate returns and paying taxes owed under existing law.”
The rule introduces a new tax reporting form called Form 1099-DA, which is intended to help taxpayers determine whether they owe taxes, and will help crypto users avoid having to do complex calculations to determine their gains, according to the Treasury Department.
Brokers will need to submit forms to both the IRS and digital asset owners to assist in preparing their taxes.
The IRS currently requires cryptocurrency users to report many digital asset activities on their tax returns, regardless of whether the transactions resulted in a profit. Users are required to do these calculations themselves, and the platforms on which digital assets are traded do not provide this information to the IRS.