The IRS suspects that some individuals could have hidden taxable income for the specified period.
FTX’s legal team noted in the filing that paying the $24 billion could impede the repayment of funds to the exchange victims.
Aside from Coinbase has raised concerns about the potential adverse impact of the proposed law across various sectors within the digital asset ecosystem.
If the appeal process, which could take years, does not result in a unanimous agreement, the corporation would have to settle any unresolved issues in court.
The United States Government Accountability Office (GAO) warns that “limits on third party information reporting to the IRS is an important factor contributing to the tax gap, which is the difference between taxes legally owed and taxes actually paid”.
The initiative will be funded through the Inflation Reduction Act, which approved $80 billion over ten years for the IRS.
The timing of the IRS’s ruling coincides with increased scrutiny from federal regulators towards crypto-staking services offered by exchanges.
Following the announcement, a section of the crypto community on Twitter has heaped praises on the IRS and Treasury Department for taking such a detailed approach instead of regulating through enforcement.
Meanwhile, the IRS has found a way to clarify the status of NFTs for crypto investors.
Whether it is an attempt to set a precedent or not, the tax authorities of the United Kingdom, Her Majesty’s Revenue and Customs (HMRC) have revised its guidance on crypto taxation in the country.
With time, Coinbase will provide customers access to learning material too on topics such as NFT tax filing in the form of written guides and instructions.