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The Internal Revenue Service (IRS) has announced the extension of the comment period on crypto tax filing requirements until January 25, 2024.
He proposed rule, released on October 19, aims to implement the provisions of the American Families Plan Act of 2023, signed into law by President Joe Biden in August. The rule would require crypto exchanges and other intermediaries to report information about transactions involving digital assets worth more than $10,000 to the IRS and taxpayers.
The rule would also require crypto companies to verify the identity of their customers and keep records of their transactions. The rule aims to improve tax compliance and transparency in the cryptocurrency sector and prevent money laundering and other illicit activities.
However, the rule has also sparked criticism and concerns from the crypto industry and its advocates, who argue that it is too broad, vague and burdensome. They claim the rule would impose excessive costs and risks on cryptocurrency companies and users, stifle innovation and growth in the sector, and violate privacy and civil liberties.
Some of the issues raised by the crypto community include the definition of digital assets, which covers not only cryptocurrencies but also non-fungible tokens (NFTs), stablecoins and decentralized financial products (DeFi), but also the scope of reporting entities, which includes not only exchanges but also peer-to-peer platforms, wallets, miners and validators, the $10,000 threshold, and the lack of clarity and guidance on how to implement the rule in practice.
The IRS said it decided to extend the comment period by 60 days in response to the “significant number of comments” it received from various parties, including individuals, businesses, trade associations, advocacy groups, lawmakers and regulators. The IRS said it welcomes “all comments on all aspects of the proposed regulations” and will consider them carefully before issuing the final rule.
The IRS announcement comes amid increasing global regulatory scrutiny over the crypto sector as governments seek to address the challenges and opportunities posed by the emerging technology. The IRS said it works closely with its counterparts in other countries and international organizations to ensure a “consistent and coordinated approach” to cryptocurrency taxes.
