Treasury takes on Crypto with massive proposed tax regulations. Exchanges must issue Form 1099s.
Biden, Treasury and the IRS are escalating efforts to get the crypto industry tax complaint.
The proposed tax regulations just issued by the Treasury Department have two main goals: First, to make it difficult for US taxpayers invested in crypto to avoid US taxation when they sell digital assets. Second, to simplify compliance.
Under the proposed tax regulations , crypto exchanges must send annual Form 1099s to the IRS and to taxpayers that detail the transactions and gain. Until now, the government lacked information as to a taxpayers’ crypto investments. Indeed, this privacy made crypto so attractive to investors, including among the criminal element.
Some exchanges already report customers’ crypto sales proceeds to the IRS. However, in these cases, the exchanges often lack knowledge of the cost basis and report all proceeds as gain. Accordingly, the IRS will consider all proceeds as gain, and send out demand letters seeking exorbitant taxes, in addition to interest and penalties.
To read the proposed regulations, see https://drive.google.com/file/d/1XC0Uv93d1iprHRMUXAm29V57V9LU568z/view?usp=sharing