US Implements New Crypto Tax Law: Transactions Exceeding $10,000 Must Be Reported to IRS Within 15 Days
A fresh tax reporting regulation has been implemented in the United States. Starting from January 1st, any American individual or business that receives $10,000 or more in cryptocurrency must file a report with the Internal Revenue Service (IRS) within 15 days. Coin Center, a leading cryptocurrency research and advocacy center, has warned that failure to comply with this requirement could result in felony charges.
The new crypto tax law, which came into effect on January 1st, 2024, is part of the Infrastructure Investment and Jobs Act passed in November 2021. According to Coin Center, the law mandates that individuals or businesses who receive $10,000 or above in cryptocurrency throughout their trade or business operations must report the transaction to the IRS. The report must include details such as the sender’s name, address, social security number, the amount received, and the date and nature of the transaction.
Jerry Brito, the executive director of Coin Center, stressed that non-compliance with the reporting requirement within 15 days could lead to felony charges. Coin Center has previously filed a lawsuit against the Treasury Department, challenging the constitutionality of the new crypto tax law. However, Brito noted that the case is still ongoing, and for the time being, individuals and businesses are obligated to comply.
Complying with the new regulations poses several challenges. Brito raised questions about reporting requirements for miners or validators who receive rewards exceeding $10,000, as well as for on-chain decentralized exchanges that involve receiving $10,000 in cryptocurrency. He also highlighted the lack of guidance from the Treasury Department regarding anonymous donations made in cryptocurrencies and reporting obligations in such cases.
Brito also noted that the IRS has not provided any guidance or designated forms for reporting crypto transactions. While the Secretary requires reporting of “cash” on Form 8300, it remains unclear how cryptocurrency, now considered a form of “cash” under the law, should be reported on this form. Additionally, Brito emphasized that the Financial Crimes Enforcement Network (FinCEN) has no authority to collect reports on cryptocurrency transactions.
Importantly, the new tax reporting law applies to both individuals and businesses. It covers individuals, such as miners, day traders, and NFT artists, who receive $10,000 or more in crypto within the scope of their trade or business activities. However, the definition of “trade or business” remains unclear according to existing Treasury guidance.
As opinions on the new tax reporting rule vary, public commentary on the matter is encouraged. Feel free to share your thoughts in the comments section below.