United States businesses won’t yet need to report cryptocurrency transactions above $10,000 to the Internal Revenue Service (IRS) until the tax agency releases a regulatory framework.
The decision follows a revision of the Infrastructure Investment and Jobs Act (IIJ Act) by the U.S. Treasury Department and the IRS, according to a Jan. 16 announcement from the IRS.
On Jan. 1, a law requiring all U.S. businesses to report cryptocurrency transactions over $10,000 came into effect, but the tax regulator has stepped back from enforcing the rule for the time being.
“At this time, digital assets are not required to be included when determining whether cash received in a single transaction (or two or more related transactions) meets the reporting threshold.”
The new rules were poorly received by crypto users. Coin Center executive director Jerry Brito noted that many would “find it difficult to comply” with the reporting requirements without further guidance from the IRS.
He speculated that filers would attempt to comply with the law but risked being found guilty of a felony.
The IIJ Act requires taxpayers to report receiving more than $10,000 cash within 15 days of the transaction. Digital Assets were considered cash under Section 6050I of the Act, but it won’t impact U.S. cryptocurrency users for now.
The IRS said it and the Treasury intend to issue proposed regulations concerning digital asset reporting but didn’t specify when they would be introduced.
It will also allow the public to comment on how the regulations should be laid out.
Related: A taxing obligation: Is crypto reporting ‘impossible’ under US law?
Digital asset advocates, the Blockchain Association referred to the news as a “positive step forward” considering the difficulties with reporting cryptocurrency transactions.
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
The U.S. House Financial Services Committee also supported the “stopgap action” but stressed several underlying problems with the “poorly constructed digital asset reporting requirements” that were passed on Jan. 1.
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