Elements of the infrastructure bill, signed into law by U.S. President Joe Biden, have now come into effect, including provisions necessitating the reporting of many digital asset transactions exceeding $10,000 to the Internal Revenue Service (IRS).
Enacted in 2021, the bipartisan infrastructure bill broadened the obligations for brokers, mandating numerous crypto exchanges and custodians to report transactions surpassing $10,000 to the IRS. Post the bill’s approval, some lawmakers proposed additional legislation to address concerns about the complexity or impracticality of gathering the required information from brokers.
Under the bill, crypto brokers are required to furnish the IRS with personal details regarding transactions, such as the sender’s name, address, and social security number, within a 15-day timeframe. Initially slated to take effect in January 2023, the reporting requirements are designed to have companies submit reports to the IRS in 2024, with the overarching goal of minimizing the tax gap in the United States.
According to Jerry Brito, executive director of Coin Center, many users may find it challenging to adhere to the reporting mandates without clear guidance from the IRS. He raised questions about scenarios such as reporting block rewards exceeding $10,000 for miners or validators and highlighted the uncertainties surrounding on-chain decentralized exchanges of crypto for crypto.
In August, Coin Center proposed the establishment of a de minimis exemption for crypto transactions, suggesting it as a solution to the perceived ambiguity in reporting guidelines. The organization aimed to address concerns about government requirements for second parties involved in crypto transactions. While the IRS had already started requiring U.S. taxpayers to report digital asset transactions in 2019, the expansion of these obligations under the bipartisan infrastructure law could pose challenges for reporting in 2024.
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