The proposal requires brokerages to begin reporting cost basis information on stocks traded by their customers on or after 1 January 2011.

“It's not a lot of time,” Stevie Conlon, tax director for the GainsKeeper division of Wolters Kluwer Financial Services, which produces software used by brokerage firms and investors for keeping track of cost basis, was quoted as saying.

“People were hoping the IRS would issue guidance in enough time so that operations systems and software could be updated,” she said.

Comments are due on the proposal by 8 February.

In a separate report yesterday by Family Wealth Report’s sister publication, WealthBriefing, it was revealed that Pershing, part of BNY Mellon, has moved to stop offering custody services for firms serving US nationals living in the UK, due to the rising reporting costs of complying with the IRS. Financial services are expecting the cost of complying with taxes and regulations to rise in the next few years, and this is likely to be a factor driving smaller firms into alliances or to sell up.