The Internal Revenue Service (IRS) published new crypto tax guidelines today, demanding that DeFi brokers collect and report much more detailed information about customers and transactions.

These new rules apply to front-end services interacting with users, but the protocols themselves are exempt.

IRS Wants Crypto Tax Info from DeFi

The IRS published these new tax guidelines on December 27, primarily focusing on DeFi institutions and their customers. Since last year, the agency has ramped up its efforts to crack down on crypto tax evasion, even developing an AI tool to assist with this task.

However, these new rules will not take effect until 2027, so existing DeFi firms have time to adapt.

“The final regulations require [DeFi] brokers to file information returns and furnish payee statements reporting gross proceeds on dispositions of digital assets effected for customers in certain sale or exchange transactions. [It also] requires certain decentralized finance industry participants to file and furnish information returns as brokers,” the annoucement wrote.

These new reporting requirements center around Form 1099, which the IRS expanded this year. The Form 1099-DA for digital assets was created this April, aimed at creating greater tax transparency for the crypto industry. Upon creation, brokers like exchanges and payment processors had to file these, and these same requirements are now extending to DeFi.

Although various elected representatives have tried to create new crypto taxes this year, the IRS conducts business as an apolitical, bureaucratic institution. It only increases taxes through methods like Go to Source to See Full Article
Author: Landon Manning