While legal, regulatory and tax uncertainty continues to affect financial transactions in digital assets, we are seeing incremental guidance developing on US federal taxation issues. The Infrastructure Investment and Jobs Act (Infrastructure Act), enacted in 2021, amended provisions in sections 6045 and 6045A to clarify and expand the rules regarding the reporting of information on digital assets by brokers.
On December 23, 2022, the United States Treasury Department and Internal Revenue Service (IRS) released Announcement 2033-2 (“Announcement”). Under the Announcement, brokers are not required to report additional information with respect to dispositions of digital assets which were not otherwise subject to reporting prior to the enactment of the Infrastructure Act until final regulations are issued under sections 6045 and 6045A.
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 may be required by IRS forms or Treasury regulations with respect to such business. The term “broker” includes a dealer, a barter exchange, any person who (for consideration) regularly acts as a middleman with respect to property or services, and any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person. 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 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. The existing treasury regulations under section 6045A do not specifically address the extent to which these requirements apply to transfers of digital assets which were not subject to reporting prior to the enactment of the Infrastructure Act.
This transitional guidance applies only to information returns filed or furnished by brokers. In contrast, taxpayers are still required to report any income they receive from transactions involving digital assets. They are also required to answer the digital asset question on page 1 of either Form 1040 or Form 1040-SR.
 All references to sections are references to sections of the Internal Revenue Code of 1986, as amended.
 Section 6045(c)(1)