US Treasury, IRS complete new rules on crypto tax reporting

The US Treasury has completed new rules requiring custodial crypto brokers — including exchanges and payment processors — to report sales and trades of digital assets to the Internal Revenue Service in a move aimed at curbing crypto tax evasion.

The final rules reflect consideration of more than 44,000 public comments received on the proposed regulations, the IRS said in a news release.

The reporting requirements should enable taxpayers to file accurate returns on digital asset transactions, which are already subject to tax under current law, according to the IRS.

“These regulations are an important part of the larger effort on high-income individual tax compliance,” IRS Commissioner Danny Werfel said. “We need to make sure digital assets are not used to hide taxable income, and these final regulations will improve detection of noncompliance in the high-risk space of digital assets.”

Crypto transactions will be reported in two years on the soon-to-be released Form 1099-DA, reflecting the 2025 calendar year.

The Chamber of Digital Commerce earlier this month cited a need to simplify the form and also stressed concerns about individual privacy.

The final regulations implement reporting requirements by the Infrastructure Investment and Jobs Act, which was enacted in 2021.

The rules don’t include reporting requirements for decentralised or non-custodial brokers that do not take possession of digital assets; they will be covered by different regulations, the IRS said.

In addition to the broker reporting rules, the regulations provide official guidelines for taxpayers to determine their basis, gains, and losses from digital asset transactions.