The new cryptocurrency bill in the United States takes effect: transactions over $10,000 must be reported within 15 days

Author: Kevin Helms
Starting January 1, a new tax reporting law has come into effect in the United States, requiring all Americans who receive $10,000 or more in cryptocurrency in the course of trade or business to report it to the IRS within 15 days. "If you do not report within 15 days of receiving the transaction, you may be charged with a felony," Coin Center warns. The new cryptocurrency tax law will take effect on January 1 Coin Center, a cryptocurrency policy advocacy group, explained in a previous blog post that the Infrastructure Investment and Jobs Act, passed in November 2021, will take effect on January 1, 2024, requiring "anyone who receives $10,000 or more in cryptocurrency in the course of trade or business to report the transaction to the IRS." "The report must include the name, address, and Social Security number of the person receiving the funds, the amount received, and the date and nature of the transaction," detailed Coin Center Executive Director Jerry Brito, "This law takes effect on January 1, and now all Americans must comply with it… If you do not report within 15 days of receiving the transaction, you may be charged with a felony." Coin Center is a leading nonprofit research and advocacy center focused on public policy issues in cryptocurrency. The organization filed a lawsuit against the Treasury Department in June 2022, questioning the constitutionality of this new crypto law. However, Brito emphasized, "This case is still pending in court," and warned, "Unfortunately, people are currently obligated to comply with the law, but it is unclear how to do so." Jerry Brito outlined some potential challenges in complying with the new regulations. "For example, if miners or validators receive block rewards exceeding $10,000, whose name, address, and Social Security number do they report? If someone engages in decentralized on-chain cryptocurrency exchanges and receives $10,000 in cryptocurrency as a result, who do they report to? What standard should be used to determine whether the amount of a certain cryptocurrency exceeds $10,000?" He also questioned who the recipient would list as the donor when someone anonymously donates Bitcoin or Ethereum to a public address. "These are all questions that the Treasury has yet to answer," Brito emphasized. Brito pointed out that the IRS "has not issued any guidance to answer these and other questions," and further noted that the Treasury currently does not provide forms for reporting cryptocurrency transactions. "The Secretary of State requires the use of Form 8300 to report 'cash,' but has not explained how to report cryptocurrency on that form. Under the law, cryptocurrency is now a form of 'cash,'" he described, adding, "Form 8300 is now submitted to FinCEN [Financial Crimes Enforcement Network] as well as the IRS. Unlike physical cash transactions, FinCEN does not have the authority to collect reports on cryptocurrency transactions, so the IRS cannot require traders to submit Form 8300 to them." Brito also clarified that the law applies to both individuals and businesses. He explained in a post on Tuesday that the obligation applies to "individuals" (if they receive more than $10,000 in the course of trade or business), not just "businesses." Therefore, if I am a miner (even as an individual), I am subject to this law. Additionally, if I am a day trader (even as an individual), I am also subject to this law. Furthermore, he noted, "If I am an NFT artist, even if I do not have a corporate entity, it will cover me." Jerry Brito reiterated, "It is not just 'businesses' that must comply; 'individuals' must also comply if they receive funds in the course of trade or business. But so far, the Treasury's guidance on the definition of 'trade or business' in the law is not entirely clear. I also cannot find explicit rules." TaxDAO will closely monitor the latest developments regarding this law and conduct an in-depth analysis of the information risks and tax treatment requirements it poses for cryptocurrency practitioners. Readers are welcome to stay tuned.