Consensys Asks IRS to Postpone Crypto Tax Regulation

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As an analyst with experience in tax law and blockchain technology, I believe Consensys’ concerns are valid and warrant further consideration by the Internal Revenue Service (IRS). The proposed regulations, which would require cryptocurrency brokers to report specific transactions using Form 1099-DA, pose significant challenges for entities that do not traditionally have reporting obligations.

As a financial analyst, I can share that Consensys, a leading blockchain development firm, reached out to the Internal Revenue Service (IRS) in the United States to ask for an extension on the implementation of tax regulations. These regulations would have compelled brokers and cryptocurrency exchanges to report specific types of digital currencies they transacted.

Bill Hughes, a lawyer at Consensys, expressed in the X post his shared worry, as previously stated in our November 2023 letter, about certain regulations and the Draft Form not giving adequate consideration to the burden on potential brokers. These entities typically don’t have any reporting obligations.

In April, the IRS unveiled an early draft of Form 1099-DA. The IRS intends to apply similar tax reporting rules to cryptocurrency brokers as those used for traditional financial intermediaries. This policy change is reflected in the introduction of Form 1099-DA for specific cryptocurrency transactions.

As a financial analyst, I would rephrase that sentence as follows: In the proposed document, I am identified as a broker offering various services related to digital assets. These include functioning as payment processors in a digital capacity, providing hosted and unhosted wallet solutions, and managing kiosks, among other roles.

As a crypto investor, I’ve come across Consensys’ argument that the lack of clear instructions for brokers in the publication of the Draft Form presents a significant challenge. In simpler terms, it means that it’s unclear to me and other investors how to report certain information on the Draft Form.

The company also pointed out that the form might pose a threat to American businesses focusing on blockchain interface design and self-storage digital wallets. Moreover, there are worries about data privacy complications and the tight timeline for brokers to adhere to the new rules before approaching tax season deadlines.

Bill pointed out that the Draft Form underscores the importance of postponing the reporting deadlines applicable to a software company like Consensys, in addition to advocating for a multiple broker rule.

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2024-06-21 14:28