Digital Chamber Flags Privacy Concerns In IRS Digital Asset Tax Draft
Highlights
- Digital Chamber submitted feedback on the proposed IRS tax reporting draft.
- The association flags privacy concerns as a major issue with the draft.
- The crypto community called for simple regulations to spur market growth.
The Digital Chamber has submitted its feedback on the Internal Revenues Service (IRS) draft 1099-DA released on April 18. The group flagged areas of concern for the wider blockchain sector on the new proposed tax reporting guideline. Other analysts and crypto stakeholders have also pointed out issues with the initial draft.
Digital Chamber Submits Pro-Industry Feedback
The Digital Chamber highlighted concerns for the proposed guidelines and recommended only necessary information required for reporting of digital asset transactions by taxpayers be requested.
“As discussed further below, reviewing the draft form underscores the overbreadth of information requested by the Draft Form and the burdens associated with tax reporting on that form. We recommend that the final form 1099-DA request only information necessary to facilitate reporting of digital asset transactions by taxpayers…”
The proposed draft rolled out layers of regulations for taxpayers on crypto assets. These rules were tagged complex and the sector pushed for less burdensome methods. Digital Chamber explained on X (formerly Twitter) that the proposed law requires sensitive data including wallet addresses and transaction IDs.
The crypto sector has raised privacy concerns with several regulatory requirements for users to disclose certain information. This spurred the growth of privacy coins to hide transactions and senders. Apart from privacy concerns, Digital Chamber noted that the draft should come with more detailed instructions for reporting and treating aspects of the ecosystem differently.
Crypto Enthusiasts Back Efforts
Virtual asset users support calls from the Digital Chambers to protect the privacy of taxpayers in the sectors. The community also stressed the importance of positive crypto laws to increase investment within the space. Similarly, blockchain firm, Consensys also wrote to the IRS asking to delay implementation of the rules citing the burden it will have on firms.
The law requires exchanges to report certain transactions and this will impact firms without those obligations previously.
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