FY 2023 Greenbook Proposes Information Reporting by Certain Financial Institutions and Digital Asset Brokers for Purposes of Automatic Exchange of Information (AEoI)!
On March 28, 2022, President Joe Biden released the FY2023 Budget and the U.S. Department of the Treasury released a document to explain the Administration’s revenue proposals included in the budget, called the General Explanations of the Administration’s FY2023 Revenue Proposals, or “Greenbook.” In it, there is a proposal for certain financial institutions (FIs) and digital asset brokers to report information for purposes of exchanging that information with other countries under the Foreign Account Tax Compliance Act (FATCA) and Intergovernmental Agreements (IGAs).
Here is how it would work with respect to digital assets:
- Certain FIs would be required to report the account balance for all financial accounts maintained at a U.S. office and held by non-U.S. persons. This includes the cash value or surrender value of a cash value insurance contract or annuity contract.
- Current reporting requirements would be expanded to include similar non-U.S. source payments.
- FIs would be required to report gross proceeds from the sale or redemption of property held in, or with respect to, a financial account held by a non-U.S. person.
- FIs would be required to report information regarding certain passive entities and their substantial owners (e.g., FI maintaining an account for a passive entity that is a trust would be required to obtain and report to the IRS information on the owner of the trust).
- Brokers (U.S. digital asset exchanges) would be required to report information relating to substantial non-U.S. owners of the passive entities with respect to digital assets held by passive entities.
- Brokers would be required to report gross proceeds and other information as the Secretary may require with respect to sales of digital assets with respect to customers, and in the case of certain passive entities, their substantial non-U.S. owners.
The purpose of this proposal is that it would allow the United States to share this information on an automatic basis with appropriate partner jurisdictions. This would also allow for the provision of reciprocal information from partner jurisdictions regarding U.S. taxpayers that directly or through passive entities engage in digital asset transactions outside of the United States and pursuant to an international automatic exchange of information framework.
This proposal would be effective for returns to be filed after December 31, 2023.
Check out the General Explanations of the Administration’s Fiscal Year 2023 Revenue Proposals here: