On January 1, 2024 a new tax reporting requirement for crypto users went into effect. The new law was a provision in the Infrastructure Investment and Jobs act passed in November of 2021. It requires anyone receiving more than $10,000.00 in crypto in the course of trade or business to report the transaction to the IRS. These reports request information including the name, address, social security number of the person sending the funds, the amount received, and the date and nature of the transaction and must be sent within 15 days of the receipt of the transaction.
Many crypto users have taken issue with this new law as the obligations and compliance mechanisms are not entirely clear. There is no crypto-specific reporting form available to account for transactions subject to the new regulation, nor has the IRS identified any web-based platform, email address, or filing address to submit these reports. Furthermore, many questions remain as to what transactions necessitate a report, and how to deal with the anonymity inherent in many blockchain transactions. For example, the IRS has not yet clarified how to report the sender’s personal information where the recipient obtains funds pursuant to a decentralized, anonymous transaction, or whose information miners should report information when receiving block rewards. The IRS has not provided guidance as to how recipients should calculate the value of any particular cryptocurrency when determining whether the transaction meets the $10,000 threshold to require a report.
Coin Center, a crypto policy focused non-profit, filed suit against the Treasury Department in 2022 challenging the constitutionality of this new law, but the case is stuck in the courts and has not been ruled on yet. As of the date of this posting, crypto users must do the best they can to comply despite the lack of clarity on how to do so. Best practices may include submitting an alternative form to the IRS, such as form 8300, which is used to report cash transactions, or submitting the required information for each transaction on a word document or spreadsheet via snail mail in an attempt to comply and avoid violations and penalties associated with non-reporting. However, until the IRS releases further guidance, crypto users will remain in the dark on this new reporting requirement.