Announcement 2023-2

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

Signed into law in November of 2021, the Infrastructure Investment and Jobs Act, Pub. L. No. 117-58, 135 Stat. 429, 1339 (2021) (Infrastructure Act), clarified and expanded the rules regarding the reporting of information on digital assets by brokers under sections 6045 and 6045A of the Internal Revenue Code. In short, it pulls digital assets into the traditional realm of gross proceeds reporting, including cost basis reporting, when that digital asset meets the definition of a covered security.

The law also requires a transfer statement when a digital asset that meets that definition is transferred from broker to broker. The Infrastructure Act went one step further regarding transfers of digital assets to non-brokers. A new type of information reporting to the IRS is now required for covered digital assets transferred to a non-broker, for example, broker to a personal wallet.

These amendments were scheduled to go into effect on January 1, 2023.

Announcement 2023-2 provides relief to these new requirements while we await regulations, new or updated forms, and instructions. Until new final regulations are issued under 6045 and 6045A, brokers may report pursuant to existing law and regulations in effect as of December 23, 2022. The announcement clarifies that brokers are not required to report on digital assets under section 6045, or issue transfer statements or information returns under section 6045A until those new final regulations under sections 6045 and 6045A are issued.

This notice does not change the taxability of these transactions in the hands of the taxpayer; they only delay the reporting. If you have questions or are interested in performing voluntary reporting, our reporting solution [WC1] can help.

The full text of Announcement 2023-2 can be accessed here.

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