3min read
Published on: Aug 12, 2024
#Crypto 360
#Daily Brew
Key Takeaways
On 9 August 2024, the U.S. tax body IRS issued an early draft of the crypto tax form for brokers and investors.
Form 1099-DA is to be used by brokers to report certain sale and exchange transactions of crypto assets beginning in calendar year 2025. Brokers will then send these forms to taxpayers and the IRS in early 2026.
The IRS has addressed privacy concerns and removed the contentious sections in the latest draft.
The updated draft of the crypto tax form aims to compel brokers, including exchanges and payment processors, to report transactions related to crypto assets to the IRS so that cases of crypto tax evasion can be addressed.
Note that the form addresses only custodial crypto brokers, not decentralised or non-custodial brokers. The IRS said it will provide rules for the latter kind of brokers in a different set of regulations later this year.
The latest draft is more streamlined and simpler than the previous one.
IRS Commissioner Danny Werfel said,
“This new form will provide more clarity for taxpayers and give them another tool to help them accurately report their digital assets transactions... This step will also help us make sure digital assets are not used to hide taxable income, including in high-income categories, while providing taxpayers who play by the rules more information to accurately report their income.”
The IRS has asked interested parties to provide public feedback about the form draft over the next 30 days.
IRS’s chief of criminal investigation Guy Ficco said in April that the tax authority expected a rise in crypto tax evasion cases this year. He said, “There’s going to be a lot more charged Title 26 crypto cases this year and moving forward.”
Ficco was speaking to CNBC at the Chainalysis Links event when he made these remarks.
Title 26 refers to those citizens who engage in deliberate tax evasion by misrepresentation and misreporting of tax documents.
Ficco said the IRS expects to charge crypto tax evasion cases more aggressively next season onwards.
The IRS treats crypto as property, not currency.
We await the time when the tax authority issues the final version of the form.
This article is for informational purposes only and not intended as investment or financial advice. It contains opinions and speculations that are subject to change without notice.
The author and publisher disclaim any liability for decisions made based on the content of this article. Readers are advised to conduct their own research and consult a financial advisor before making investment decisions.
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