Bittrex don't exchange fiat currencies so they have nothing to report except there own business tax returns.
I don't think that's the case. I mean, they don't report to the IRS. But virtually every transaction (including crypto-crypto) is taxable from a capital gains perspective. Just because you don't wire dollars to your bank account doesn't mean you don't technically owe taxes. This is why I prefer not to verify ID at exchanges. Just in case...
Show me a law that says Bittrex have to report customers crypto to crypto transactions to the IRS.
I can certainly show you a law that says they would have to report fiat.
I think the comment was about the tax liabilities of traders/investors, not the burden of tax reporting for Bittrex. Regarding the former, here's the general guidance from the IRS:
https://www.irs.gov/newsroom/capital-gains-and-losses-10-helpful-facts-to-knowWhen you sell a capital asset, the sale normally results in a capital gain or loss. A capital asset includes most property you own for personal use or own as an investment.
Gains and Losses. A capital gain or loss is the difference between your basis and the amount you get when you sell an asset. Your basis is usually what you paid for the asset.
I actually recently consulted extensively with two tax advisors because I was concerned about reporting correctly. Every asset has a cost basis, assuming it is at least convertible to BTC (liquid), if not USD or similar. The IRS has stated clearly that virtual currency is treated as property for the purposes of taxation. I don't see any way around that.
https://www.irs.gov/pub/irs-drop/n-14-21.pdf For federal tax purposes, virtual currency is treated as property. General tax principles applicable to property transactions apply to transactions using virtual currency.
The basis of virtual currency that a taxpayer receives as payment for goods or services in Q&A-3 is the fair market value of the virtual currency in U.S. dollars as of the date of receipt.
If the fair market value of property received in exchange for virtual currency exceeds the taxpayers adjusted basis of the virtual currency, the taxpayer has taxable gain.
Regarding the reporting requirements for exchanges that serve US customers:
https://www.irs.gov/pub/irs-pdf/i1099b.pdfA broker or barter exchange must file Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, for each person: For whom the broker has sold (including short sales) stocks, commodities, regulated futures contracts, foreign currency contracts (pursuant to a forward contract or regulated futures contract), forward contracts, debt instruments, options, securities futures contracts, etc., for cash; Who received cash, stock, or other property from a corporation that the broker knows or has reason to know has had its stock acquired in an acquisition of control or had a substantial change in capital structure reportable on Form 8806; or Who exchanged property or services through a barter exchange.
A broker is any person who, in the ordinary course of a trade or business, stands ready to effect sales to be made by others. A broker may include a U.S. or foreign person or a governmental unit and any subsidiary agency.
Brokering the exchange of property, by my reading, appears to trigger reporting requirements.
If they aren't (currently or not) reporting to the IRS, why are they requiring SSN?
They are trying to act legitimate for AML/KYC purposes. Don't they only require last 4 of your SSN for a basic account? At least that was the case for new accounts as of several days ago. Poloniex does ask for full SSN now, which is insane. Who would trust these fly-by-night exchanges with such data?!