Digital Chamber of Commerce Provides Feedback on IRS's Draft Crypto Tax Form
Summary:
The Digital Chamber of Commerce has provided feedback on the IRS's draft Form 1099-DA, aimed at simplifying the form for reporting digital asset transactions and addressing privacy concerns. The Chamber advocates for only requiring essential tax reporting data and protecting sensitive information like transaction IDs. It suggests including broker instructions and allows brokers to reflect if a digital asset is subject to a different tax rate. This feedback follows the IRS's invitation for public comments on the draft form.
The Digital Chamber of Commerce, a prominent association in the blockchain sphere, has delivered its critique on the IRS's draft Form 1099-DA, intended for declaring digital currency transactions. The comprehensive response from the Chamber is geared towards streamlining the form, facilitating its use for brokers working with digital assets like cryptocurrencies, and addressing privacy concerns of taxpayers, recommending that only indispensable information for reporting digital currency transactions should be asked for.
The Chamber expressed its discontent with the draft form for demanding surplus information. In its view, the finalized form should only mandate details pivotal for basic tax reporting; any supplementary information should be conserved by brokers for potential IRS audits.
The Chamber harbors reservations about the form's requirement for sensitive information, including transaction IDs and digital currency addresses. There's a belief that collecting such specifics could encroach on taxpayer privacy and should only occur if there's a suspicion of illegal behavior.
The Chamber’s critique points out that the preliminary form insinuates the inclusion of explicit broker instructions which are missing. The Chamber counsels the IRS to unveil these instructions for a public overview before finalizing the form, thereby ensuring brokers can fill it out correctly.
The body suggests that the form should permit brokers to denote when a digital asset is taxed at a divergent rate, such as Non-fungible tokens (NFTs) which might be classified as collectibles and taxed at a steeper rate. This would curb errors during IRS processing and guarantee precise tax reporting.
The IRS unveiled the draft form on April 18, 2024, and solicited the public's thoughts in the Federal Register on April 22, 2024. The feedback from the Chamber supplements its previous comments on correlating proposed regulations submitted in November 2023.
Per the draft form, brokers will prepare Form 1099-DA for every client who trades or offloads digital assets. This includes kiosk operators, digital currency payment processors, hosted, and non-hosted wallet providers and more. Upon publicizing the suggested reporting requirements, they garnered feedback from the crypto community. The Blockchain Association commented that the rule contains "fundamental miscomprehensions about the essence of digital assets and decentralized technology.
Published At
6/22/2024 11:59:52 AM
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