IRS eases cryptocurrency tax reporting rules, temporarily exempting transactions over $10,000
- The IRS is temporarily suspending reporting of cryptocurrency transactions over $10,000 until regulatory guidance is in place.
- Cryptocurrency advocates see this as a positive development that provides relief amid the uncertainty of requirements.
- A U.S. House of Representatives committee supports the temporary measure but highlights ongoing concerns about initially poorly structured digital asset reporting requirements.
According to a recent announcement by the National Tax Service, (revenue) It has taken a step back from enforcing a requirement that U.S. businesses report cryptocurrency transactions exceeding $10,000. This decision is a result of Treasury and IRS amendments to the Infrastructure Investment and Jobs Act (IIJ Act), as disclosed in a January 16 statement.
Temporary relief due to reporting uncertainty
The law, which went into effect on January 1, requires all U.S. companies to report cryptocurrency transactions worth more than $10,000. However, the National Tax Service chose this. Implementation of this rule is temporarily suspended Until a regulatory framework is established.
The IRS has now made clear that digital assets are not a determining factor when assessing whether cash received in a single transaction or related transactions exceeds reporting thresholds.
Challenges and concerns of the cryptocurrency community
The initial rules were met with resistance from the cryptocurrency community, with Coin Center Executive Director Jerry Brito expressing concern that compliance would be difficult without comprehensive guidance from the IRS. He emphasized that while complainants attempt to comply with the law, the uncertainty puts them at risk of facing felony charges.
Upcoming Regulations and Public Comments
The IIJ Act requires taxpayers to report cash receipts in excess of $10,000. Within 15 days Transactions in which digital assets are considered cash under Section 6050I of the Act. However, the impact on U.S. cryptocurrency users is currently pending, awaiting proposed regulations from the IRS and Treasury.
Both companies have expressed their intention to introduce regulations for digital asset reporting, but no release date has yet been set. The IRS also plans to open space for public comment on the structure of these regulations.
Positive response and ongoing concerns
The Blockchain Association, which advocates for digital assets, welcomed the temporary relief as a “positive step forward” given the complexities involved in reporting cryptocurrency transactions. However, a U.S. House of Representatives committee acknowledged the temporary measure as a “stopgap measure,” highlighting chronic problems with “poorly structured digital asset reporting requirements” enacted on January 1.
The IRS said 6050I, a problematic provision of the infrastructure bill that requires reporting of digital asset transactions over $10,000, is invalid until more rules are enacted. This is a positive development considering the impossibility and breadth of reporting required. https://t.co/x8SFAQfuEh
— Blockchain Association (@BlockchainAssn) January 16, 2024