The Biden administration's cunning plan to garnish billions in taxes from crypto has reportedly hit a wall.
The provision in the US infrastructure bill signed into law in November, which will require financial institutions and crypto brokers to report additional information, could reportedly be delayed.
Bloomberg reports, according to people familiar with the matter, that the Treasury Department and the Internal Revenue Service are likely to push off a January 2023 date for the firms to begin tracking data such as customers’ capital gains and losses.
Once rules are in place, exchanges and brokerages will have to send the detailed transaction data to the IRS and their clients who made the trades, who could then use the information to file their taxes. The data would include customer names and addresses, gross proceeds from sales, and any capital gains or losses.
As CoinTelegraph reports, the potential delay could reportedly affect billions of dollars related to capital gains taxes - the Biden administration’s budget for the government for the 2023 fiscal year previously estimated modifying the crypto tax rules could reduce the deficit by roughly $11 billion.
Remember, it's all for your own good:
“It could be very helpful just to standardize the reporting and put it in a way that makes it easier to digest and put on a tax return,” said Michael Desmond, former chief counsel for the IRS
In other words, helping the IRS find tax cheats... and simplifying reporting for all the honest crypto players.
For now, according to Jake Chervinsky, head of policy at the Blockchain Association,"delaying is smart."
“We're getting closer & closer to the effective date of the infrastructure bill's tax provisions & we're still waiting for guidance or rulemaking on implementation,” he added.
If true, this is good news.— Jake Chervinsky (@jchervinsky) June 29, 2022
We're getting closer & closer to the effective date of the infrastructure bill's tax provisions & we're still waiting for guidance or rulemaking on implementation. We've also seen legislative proposals that could make big changes. Delaying is smart. https://t.co/m7bMDiVFFU
Bloomberg notes that in addition to the rules, Treasury and the IRS are working on a new form for crypto firms to use called the 1099-DA, which will be different than the 1099-B used by stock and bond brokers.
There is no escaping the inevitable though as the Biden administration is adamant that crypto tax evasion remains a major issue for Washington policy makers.