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FameEX Hot Topics | US Implements New Crypto Tax Regulation: IRS Must Be Notified of Transactions Exceeding $10,000 Within 15 Days
2024-01-03 16:37:45
A significant change in cryptocurrency tax reporting came into effect in the U.S. on January 1, 2024, under the Infrastructure Investment and Jobs Act, passed in November 2021. This new law mandates that any American receiving $10,000 or more in cryptocurrency as part of their trade or business must report the transaction to the Internal Revenue Service (IRS) within 15 days. Failure to comply could result in felony charges, as warned by Coin Center, a prominent crypto policy advocate.
Coin Center's blog post detailed the reporting requirements: individuals must provide the sender's details, including their name, address, and social security number, along with the amount, date, and nature of the transaction. Jerry Brito, Coin Center's executive director, highlighted the broad application of this law to all Americans and underscored the severe consequences of non-compliance.
Despite Coin Center’s ongoing lawsuit against the Treasury Department challenging the law's constitutionality, Brito emphasized the current obligation to comply, albeit with unclear compliance methods. He pointed out several practical difficulties, such as identifying relevant details for miners or validators receiving block rewards exceeding $10,000, or determining the counterpart in on-chain decentralized crypto exchanges. Brito also noted the lack of guidance from the IRS on addressing these issues, including the absence of a specific form for crypto transaction reporting. Currently, 'cash' transactions are reported using Form 8300, but it’s unclear how cryptocurrency, now legally considered a form of 'cash,' fits into this framework, especially since FinCEN (Financial Crimes Enforcement Network) doesn’t have the authority to collect reports on cryptocurrency transactions. The law's application extends beyond businesses to individuals. Brito explained that it covers individuals engaged in activities like mining, day trading, or creating non-fungible tokens (NFTs), regardless of whether they operate as an incorporated business. He also highlighted the ambiguity surrounding the definition of 'trade or business,' pointing out the absence of a clear, definitive rule from the Treasury to date. This new regulatory landscape marks a significant shift in the U.S. government's approach to cryptocurrency taxation, posing challenges and uncertainties for individuals and businesses alike. It underscores the need for clearer guidelines and understanding of the complexities involved in cryptocurrency transactions and their reporting requirements. Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.
