Treasury Will Narrowly Apply the “Broker” Provision That Requires Reporting
In February 2022, the U.S. Treasury Department issued a letter stating it would not narrowly apply the broker reporting provisions within the infrastructure bill that became law in November 2021 that impose burdensome tax reporting requirements for crypto investors deemed “brokers.”
The broker designation will force firms — no matter how big or small — to collect and disclose detailed information of customers, including names and addresses, gross proceeds from sales, and any capital gains or losses. For months, the industry and trade association have argued that certain groups within the cryptocurrency space, such as stakers and miners, do not have access to that kind of information, which would make crypto tax compliance extremely difficult, if not impossible.
Bloomberg News first reported on the letter, which it had obtained, and attributed it to Treasury Assistant Secretary for Legislative Affairs Jonathan Davidson. According to the Bloomberg article, the letter stated:
“…the department’s view is that ‘ancillary parties who cannot get access to information that is useful to the IRS are not intended to be captured by the reporting requirements for brokers.’ That language signals that people who use mining or staking to validate crypto transactions, as well as software and hardware providers, will be able to avoid the demands.”
The article went on to state that the Treasury will rather issue its own proposed regulations in the future to characterize its views on defining the “broker” term. The letter has since alleviated many concerns previously expressed by crypto industry groups and companies.
No matter how tax laws change, Cointelli has you covered
Regardless of how the U.S. Treasury Department interprets the term “crypto broker” in the future doesn’t matter — because Cointelli has you covered regardless. Our team of crypto experts, and certified public accountants (CPAs) scour the U.S. tax code regularly to stay current on any updates, revisions, or changes the government comes up with.
Additionally, Cointelli helps tax filers stay compliant with the most reliable, automated crypto transaction transfer process within the industry, supporting a considerably larger number of major crypto exchanges than many other competitors — and with full data import capabilities. Examples of exchanges supported by Cointelli include major companies such as Coinbase, Binance, and KuCoin, but also include many of the more niche exchanges.
Furthermore, Cointelli also features support for at least 15 blockchains, including major ones such as Bitcoin, Ethereum, and even Dogecoin. Not only does Cointelli ensure the most reliable data transfer of your crypto transactions into its online tax solution, but once the calculations are made, double-checked, and loaded into the tax documents, Cointelli syncs and works with the most popular tax and accounting softwares on the market.
Because many cryptocurrency tax software platforms are limited in working with these applications, it’s important to find out whether the crypto tax software works with TurboTax and the like, or with softwares that CPAs use. Cointelli provides compatibility with both of the above and more. It generates your tax reports in a form that is ready for direct upload to TurboTax and TaxAct, and can also send your tax report straight to your accountant via email with a simple click of the ‘Send to Accountant’ button.
While the Treasury Department has reduced the tax reporting requirements for certain crypto investors with its decision to limit the application of the crypto “broker” provision, Cointelli reduces your stress and worry by making your entire tax preparation and reporting process easier than you’ve ever imagined.
DISCLAIMER: This post is for informational purposes only and should not be interpreted or relied upon as a substitute for the advice of financial, legal, or tax professionals. This content also only addresses U.S. federal income tax consequences for U.S. citizens and residents and does not address tax consequences that may be relevant to a particular person subject to special rules, such as dealers or traders. You should consult with your own financial, legal, or tax professionals to report and file your crypto taxes or make decisions on your particular circumstances. The laws, regulations, or interpretation of the existing laws could change, which may adversely affect either prospectively or retroactively. The content of this post is subject to changes.
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