IRS rules require reporting of $10k crypto transactions by 2024
Aspects of the infrastructure bill signed by US President Joe Biden are now in effect – including provisions requiring most digital asset transactions worth more than $10,000 to be reported to the Internal Revenue Service (IRS).
A bipartisan infrastructure bill passed by Congress in 2021 and signed by President Biden expands requirements for brokers to own multiple crypto exchanges and require custodians to report transactions of more than $10,000 to the IRS. Following the law's passage, many lawmakers suggested additional legislation to “fix” the reporting requirement, saying it was difficult or impossible to collect the required information from brokers.
The bill would require crypto brokers to disclose personal information to the IRS within 15 days, including the sender's name, address and social security number. Requirements aimed at reducing the size of the tax loophole in the United States, requiring companies to file 2024 reports with the IRS, were scheduled to go into effect as early as January 2023.
According to Jerry Brito, executive director of the Coin Center, many consumers find it difficult to comply with reporting requirements outside of the IRS's guidelines. He assumed that filers would try to comply with the law, but could be found guilty of a crime.
Related: IRS Group Reports Increased Crypto Tax Probes
“[I]If a miner or verifier receives rewards over $10,000, whose name, address and social security number do you report?” said Brito. “If you participate in an off-chain crypto-for-crypto exchange and therefore receive $10,000 in cryptocurrency, who do you report to? And how should you measure whether the amount of a particular cryptocurrency exceeds $10,000?”
New crypto tax reporting obligations came into force on January 1st.
If you receive $10K or more in crypto, you are now obligated to report the transaction (including names, addresses, SS numbers) to the IRS within 15 days under threat of criminal charges. pic.twitter.com/wyRsfJEpMo
— Jerry Brito (@jerrybrito) January 2, 2024
Brito added:
“The most difficult nature of this requirement becomes clear when someone makes such a donation, but does so anonymously by sending Bitcoin or Ether to our public address. Who can we list as a sender in this case?”
In August, CoinCenter proposed an exemption for crypto transactions as a solution to the IRS's perceived lack of clarity in reporting guidelines and the government's failure to enforce requirements for second parties to crypto transactions. The IRS began requiring US taxpayers to report digital asset transactions in 2019, but expansion of these requirements under bipartisan infrastructure legislation will make reporting difficult by 2024.
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