Aug 25, 2023 - Economy & Business

IRS proposes new crypto tax rules

Illustration of a bald eagle flying down to grab a golden coin with binary code

Illustration: Sarah Grillo/Axios

The U.S. Treasury Department and the IRS Thursday proposed rules that would make it harder for crypto investors to dodge paying taxes — and simpler for people to comply.

Why it matters: The regulations would implement a 2021 law and were estimated to generate some $30 billion over a decade.

Driving the news: Under the proposal, crypto exchanges like Coinbase and Kraken would be required to send annual reports to their customers and the IRS, in similar fashion to brokers who manage customers' stock investments.

The big picture: It's been relatively easy for American investors to circumvent paying capital gains owed to the government, in part because digital assets transactions are more complicated for agencies to track. Their novelty also puts them in a reporting gray zone.

Details: Some crypto transactions aren't directly tied to a name, and if exchanges don't provide reports on them, it's harder for the IRS to know what folks owe.

  • And some studies show that tax compliance is higher when the IRS has independent info about people's income.

Decentralized finance (DeFi) venues and NFT marketplaces would also have to submit to those rules.

  • Coinbase proposed a solution for DeFi tax reporting earlier this week.

What's next: The U.S. Treasury will take public input and feedback on the proposed regulations.

  • When fully implemented, crypto exchanges would send reports starting in 2026 for the 2025 tax year.

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