IRS Delays Crypto Tax Reporting for Transactions Over $10K

In a recent announcement on January 16, the Internal Revenue Service (IRS) revealed that U.S. businesses will not be obligated to report cryptocurrency transactions above $10,000 until the tax agency introduces a comprehensive regulatory framework. This decision comes in response to a revision of the Infrastructure Investment and Jobs Act (IIJ Act) by the U.S. Treasury Department and the IRS.

IRS states 6050I–a problematic provision of the infrastructure bill requiring reporting digital asset transactions over $10K–isn't effective until there's more rulemaking. A positive step forward given its impossibility and breadth of reporting required.https://t.co/x8SFAQfuEh

— Blockchain Association (@BlockchainAssn) January 16, 2024

Despite the implementation of a law on January 1 requiring all U.S. businesses to report cryptocurrency transactions exceeding $10,000, the IRS has chosen not to enforce this rule temporarily. According to the IRS statement, digital assets are currently not mandatory for inclusion when determining if the cash received in a single transaction or related transactions meets the reporting threshold.

The initial introduction of the new rules faced backlash from the crypto community, with Coin Center executive director Jerry Brito expressing concerns about compliance difficulties without clear guidance from the IRS. He highlighted the risk of filers unintentionally violating the law and facing felony charges.

The Infrastructure Investment and Jobs Act (IIJ Act) mandates taxpayers to report receiving cash amounts exceeding $10,000 within 15 days of the transaction. While digital assets were initially considered as cash under Section 6050I of the Act, U.S. cryptocurrency users are temporarily exempt from these reporting requirements.

The IRS and the Treasury Department have indicated their intention to issue proposed regulations regarding digital asset reporting, without specifying the timeline for introduction. Additionally, they plan to invite public comments on how these regulations should be structured.

The Blockchain Association, representing digital asset advocates, views this development as a "positive step forward" given the challenges associated with reporting cryptocurrency transactions. However, the U.S. House Financial Services Committee, while supportive of the temporary delay, emphasizes ongoing concerns about the "poorly constructed digital asset reporting requirements" implemented on January 1.