Transitional guidance under sections 6045 and 6045A with respect to the reporting of information on digital assets by brokers

Part IV – Items of General Interest

Transitional guidance under sections 6045 and 6045A with respect to the reporting of

information on digital assets by brokers.

Announcement 2023-2

Section 80603 of the Infrastructure Investment and Jobs Act, Pub. L. No. 117-58,

135 Stat. 429, 1339 (2021) (Infrastructure Act) clarifies and expands the rules regarding

the reporting of information on digital assets by brokers under sections 6045 and 6045A

of the Internal Revenue Code. This announcement provides transitional guidance

under sections 6045 and 6045A with respect to the reporting of information on digital

assets.

Section 6045(a) provides that every person doing business as a broker shall make a

return showing the name and address of each customer, with such details regarding

gross proceeds and such other information as the Secretary of the Treasury or her

delegate (Secretary) may by forms or regulations require with respect to such business.

These rules apply when required by the Secretary and in accordance with regulations

prescribed by the Secretary. Other subsections of section 6045 require a broker to

furnish a payee statement to customers, define the term “broker,” require basis

reporting for specified securities that are also covered securities, and provide other

applicable rules.

1

A person doing business as a broker is required to file information returns and

furnish payee statements in accordance with existing regulations under section 6045 for

each customer for whom the broker has sold stocks, certain commodities, and other

specified categories of assets in exchange for cash. The information returns and payee

statements are required to show each customer’s name and address, details regarding

gross proceeds, the adjusted basis of certain categories of assets sold, and certain

other information

ing regulations under section 6045 for

each customer for whom the broker has sold stocks, certain commodities, and other

specified categories of assets in exchange for cash. The information returns and payee

statements are required to show each customer’s name and address, details regarding

gross proceeds, the adjusted basis of certain categories of assets sold, and certain

other information. Brokers must furnish payee statements to customers by February 15

of the year following the calendar year of the sale. Brokers must file information returns

on Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, with the

Internal Revenue Service (IRS) by February 28 (or March 31 if filing electronically) of

the year following the calendar year of the sale. The existing regulations under section

6045 do not specifically address the extent to which these requirements apply to sales

or exchanges of digital assets and do not specifically include digital assets as a

specified security subject to basis reporting.

Section 6045A(a) generally requires a broker who transfers to another broker

securities that are covered securities in the hands of the transferring broker to furnish to

the receiving broker a written statement setting forth information required by the

regulations. The existing regulations under section 6045A require transfer statements

to include specified information about the customer, the brokers involved, and the

original acquisition information about the covered security. Brokers must furnish the

transfer statements required under section 6045A(a) not later than 15 days after the

date of the transfer. Section 6045A(c). The existing regulations under section 6045A

do not specifically address the extent to which these requirements apply to transfers of

2

digital assets

ormation about the covered security. Brokers must furnish the

transfer statements required under section 6045A(a) not later than 15 days after the

date of the transfer. Section 6045A(c). The existing regulations under section 6045A

do not specifically address the extent to which these requirements apply to transfers of

2

digital assets.

Section 80603 clarifies and expands the rules regarding how digital assets should be

reported by brokers under sections 6045 and 6045A to improve tax administration and

tax compliance with respect to trading and investing in digital assets. First, section

80603(a) clarifies the definition of broker in section 6045(c)(1) to include any person

who, for consideration, is responsible for regularly providing any service effectuating

transfers of digital assets on behalf of another person. Second, section 80603(b)(1)

modifies the definition of specified securities subject to basis reporting under section

6045(g) to explicitly include digital assets and to provide that these specified securities

are treated as covered securities for purposes of basis reporting if they are acquired on

or after January 1, 2023. Third, section 80603(b)(1)(B) defines a digital asset to mean

any digital representation of value which is recorded on a cryptographically secured

distributed ledger or any similar technology as specified by the Secretary, except as

otherwise provided by the Secretary. Fourth, section 80603(b)(2) clarifies that transfer

statement reporting under section 6045A(a) applies to transfers between brokers of

covered securities that are digital assets and adds a new information reporting provision

for certain transfers under section 6045A(d)

d

distributed ledger or any similar technology as specified by the Secretary, except as

otherwise provided by the Secretary. Fourth, section 80603(b)(2) clarifies that transfer

statement reporting under section 6045A(a) applies to transfers between brokers of

covered securities that are digital assets and adds a new information reporting provision

for certain transfers under section 6045A(d). Under this new provision, brokers must

report to the IRS transfers during a calendar year of digital assets that are covered

securities, provided the transfer is not part of a sale or exchange and is not to an

account maintained by a person that the broker knows or has reason to know is also a

broker. Finally, section 80603(c) provides that these amendments apply to returns

required to be filed, and statements required to be furnished, after December 31, 2023.

The Department of the Treasury (Treasury Department) and the IRS intend to

3

implement section 80603 of the Infrastructure Act by publishing regulations specifically

addressing the application of sections 6045 and 6045A to digital assets and providing

forms and instructions for broker reporting. A notice of proposed rulemaking will be

published that sets forth proposed regulatory text, explains the proposed rules, solicits

public comments, and announces a public hearing. This process will allow the Treasury

Department and the IRS to accept comments from affected taxpayers, industries, and

other interested parties and enable the public to meaningfully participate in the

regulatory process. After careful consideration of all public comments received and all

testimony at the public hearing, final regulations will be published.

Until the Treasury Department and the IRS issue new final regulations pursuant to

section 80603 under section 6045, a broker may report gross proceeds and basis as

required under existing law and regulations as of December 23, 2022

the

regulatory process. After careful consideration of all public comments received and all

testimony at the public hearing, final regulations will be published.

Until the Treasury Department and the IRS issue new final regulations pursuant to

section 80603 under section 6045, a broker may report gross proceeds and basis as

required under existing law and regulations as of December 23, 2022. In addition, until

the Treasury Department and the IRS issue new final regulations pursuant to section

80603 under section 6045A, a broker may furnish statements on transfers of covered

securities as required under existing law and regulations as of December 23, 2022.

Brokers will not be required to report or furnish additional information with respect to

dispositions of digital assets under section 6045, or issue additional statements under

section 6045A, or file any returns with the IRS on transfers of digital assets under

section 6045A(d) until those new final regulations under sections 6045 and 6045A are

issued.

The principal author of this announcement is the Office of the Associate Chief

Counsel (Procedure & Administration).

4