The Internal Revenue Service and the US Department of Treasury have proposed regulations to eliminate the tax gap in the purchase and exchange of digital assets.
The Internal Revenue Service and the US Department of the Treasury jointly released proposed regulations with the intention of improving compliance and transparency in the digital asset market.
Brokers will be required to record sales and exchanges of digital assets made by their clients under these regulations.
The proposed regulations address a variety of issues relating to digital assets most notably defining brokers and requiring the IRS to receive reports of revenues on the recently established Form 1099 DA.
Brokers which include online trading platforms for digital assets, payment processors, and some providers of hosted wallets will have to report gross proceeds on Form 1099 DA as of January 1, 2025.
In accordance with the laws, real estate reporting institutions such as title firms and real estate brokers are required to record the disposition of digital assets used as consideration in real estate transactions that close on or after January 1, 2025.
Written comments will be accepted until October 30, 2023 in order to solicit public feedback on these proposed regulations.
To accommodate the anticipated volume of replies, public hearings are set on November 7 and 11, 2023.