Debate: Should crypto exchanges be required to report clients to the IRS?

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Cryptocurrency has been considered property for tax purposes since the IRS issued initial guidance in 2014. In the meantime, the agency has provided little guidance to investors in terms of rules for reporting earnings.

Under the new infrastructure law, cryptocurrency “brokers” who provide services performing digital asset transfers (in other words, cryptocurrency exchanges) will be required to disclose information about their clients directly to the IRS on Form 1099-B.

Companies and exchanges will also be required to file a report whenever they receive more than $ 10,000 in cryptocurrency. Recipients of the transaction will also be subject to certain reporting requirements, including verification of personal information and social security numbers.

We asked two ALM Tax Facts professors and authors with opposing political views to share their thoughts on the new cryptocurrency reporting requirements.

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Here is a summary of the debate that ensued between the two professors.

Their votes:

Bloink

Byrnes

Their reasons:

Bloink: For too long, taxpayers have profited from cryptocurrency transactions without paying their fair share of taxes. It is a poorly regulated industry that has given investors the ability to hide their earnings for years. The new, extended reporting regime will go a long way in ending this so that everyone pays taxes on their investment earnings appropriately.

Byrnes: This expansive new law is going to be an administrative nightmare. It is too broad in that it imposes reporting requirements even on parties who may not have the relevant information they are asked to provide. The parameters of the new reporting requirements should have been adjusted before the legislation was passed.

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