Consensys Implores IRS for Extension on Crypto Tax Rule Implementation
Consensys wrote to the Internal Revenue Service (IRS) of the United States, requesting to hold off tax regulation that mandated brokers and exchanges to report specific digital asset types, according to an X post by one of the platform’s lawyers, Bill Hughes.
Consensys, the blockchain company specializing in developing solutions and tools for the Ethereum network, wrote to the IRS regarding the latter’s plan to regulate some cryptocurrencies in the Form 1099-DA.
Regarding the rationale behind Consensys’ course of action, Hughes, in the tweet said, “Fundamentally, 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. We must also reemphasize the acute burden and cost to the tens of millions of taxpayers receiving this form.”
The firm also added that the regulatory rule will bring a huge toll financially on the blockchain company and could potentially jeopardize U.S. businesses focused on blockchain user interfaces and self-custody wallets.
Consensys also raised issues, in the letter, concerning data privacy in line with the requirements in the Form 1099-DA, as well as the limited time required for the concerned firms (brokers) to meet up with the imminent tax filing deadlines.
IRS Issues Form 1099-DA for Digital Asset Reporting
The IRS of the United States released an early version of the Form 1099-DA with the title, “Digital Asset Proceeds from Broker Transactions,” which will take effect from 2025 and be used for 2026 reporting.
The contents of the form required brokers, which included, “kiosk operators, digital payment processors, hosted wallet providers, and non-hosted wallet operators,” to document their transactions on cryptocurrencies, NFTs, and stablecoins and submit a copy of such document to the IRS and another to their customers.
According to the IRS, implementing the rule will make it easier for the organization to track taxpayers buying and selling crypto.
However, the recent letter released by Consensys through its lawyer, Hughes, revealed that the rules in Form 1099-DA could jeopardize the businesses of the brokers.
In a similar development, Consensys filed a lawsuit against the US SEC over its plans to regulate Ether as a security. However, the blockchain company announced recently that the SEC ended its investigation into Ethereum as a security.
