March 27, 2024
IRS Mandates Reporting for $10K Crypto Transactions: New Rules Effective in 2024
Policy & Regulation

IRS Mandates Reporting for $10K Crypto Transactions: New Rules Effective in 2024

Aspects of the bipartisan infrastructure bill, signed into law by President Joe Biden in 2021, are now in effect, ushering in new regulations that require reporting to the Internal Revenue Service (IRS) for digital asset transactions exceeding $10,000. The infrastructure bill, aimed at enhancing the nation’s infrastructure, has raised concerns among crypto users and industry experts about the practicality and challenges associated with the reporting requirements.

The bill expands the obligations for brokers, compelling many crypto exchanges and custodians to report transactions greater than $10,000 to the IRS. The reporting mandate includes personal information such as the sender’s name, address, and social security number, with a deadline of 15 days for submission. Initially scheduled to take effect in January 2023, companies are now expected to send reports to the IRS in 2024.

Jerry Brito, executive director of Coin Center, expressed concerns about the complexity of complying with the reporting requirements without clear guidance from the IRS. Brito highlighted potential difficulties, stating, “[I]f a miner or validator receives block rewards over $10,000, whose name, address, and Social Security number do they report? If you engage in an on-chain decentralized exchange of crypto for crypto and you, therefore, receive $10,000 in cryptocurrency, who do you report?”

He further pointed out the intricacies of reporting in cases of anonymous donations made through cryptocurrencies, raising questions about identifying the sender in such instances. Brito emphasized that many users “will find it difficult to comply” with the requirements, risking potential legal consequences.

In August, Coin Center proposed a de minimis exemption for crypto transactions, suggesting it as a solution to the perceived vagueness in reporting guidelines. The organization also advocated against imposing requirements on second parties involved in crypto transactions.

The expansion of reporting requirements under the bipartisan infrastructure law adds another layer of complexity to the already evolving landscape of cryptocurrency regulations. As users grapple with compliance challenges, the implementation of these provisions will likely prompt further discussions on refining and clarifying the reporting guidelines to align with the unique nature of the crypto ecosystem.

Image: Wikimedia Commons

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