The blockchain development company, Consensys, wrote to the Internal Revenue Service of the United States requesting a postponement of the tax regulation that would have required brokers and exchanges to report specific cryptocurrency types.
Bill Hughes, a lawyer at Consensys, said in X post, “We must echo our overarching concern expressed in our November 2023 letter that certain aspects of the regulations (and now, too, the Draft Form) do not sufficiently consider the burden on the would-be broker, which currently includes entities that do not traditionally have any reporting obligations.”
IRS released an early version of Form 1099-DA, in April. IRS efforts to treat cryptocurrency brokers the same as traditional financial brokers for tax reporting purposes are the source of the proposed regulations. This includes the issuance of Form 1099-DA for certain cryptocurrency transactions.
Brokers are listed in the draft form as digital asset payment processors, hosted and unhosted wallet providers, operators of kiosks, and others.
Consensys argues, “For instance, the Draft Form has not been published with instructions for brokers, presenting an insurmountable challenge when asked to create a plan to implement the Draft Form. Said simply, it is unclear how to report in several boxes of the Draft Form.”
The firm also added that the form could potentially harm U.S. companies specializing in blockchain user interfaces and self-custody wallets. Additionally, concerns have been raised regarding data privacy issues and the limited time brokers have to comply with the new requirements before upcoming tax filing deadlines.
Bill noted, “We believe the Draft Form further illustrates the need for a delay in the effective date of any reporting requirements that would pertain to a software developer like Consensys as well as the need for a multiple broker rule.”
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