IRS Demands Reporting for $10,000 Crypto Transactions in 2024
The implementation of provisions from the bipartisan infrastructure bill, signed into law by President Joe Biden, has raised concerns and uncertainties regarding the compliance with crypto tax reporting guidelines in 2024. The bill, which came into effect recently, mandates crypto brokers to report transactions exceeding $10,000 to the IRS, requiring personal information such as the sender's name, address, and social security number within a 15-day timeframe.
The legislation aims to address the tax gap in the United States by expanding reporting requirements for crypto exchanges and custodians. However, industry experts, including Coin Center executive director Jerry Brito, express reservations about the practicality of compliance without clear guidance from the IRS. Brito emphasizes the challenges users may face, particularly in scenarios such as miners or validators receiving block rewards or engaging in on-chain decentralized exchanges, where determining reporting criteria becomes complex.
New crypto tax reporting obligations took effect on Jan 1.
— Jerry Brito (@jerrybrito) January 2, 2024
If you receive $10k or more in crypto you now have an obligation to report the transaction (including names, addresses, SS numbers, etc.) to the IRS within 15 days under threat of a felony charge. pic.twitter.com/wyRsfJEpMo
Brito highlights the potential risk of unintentional non-compliance, leading to legal consequences, as individuals may struggle to navigate the intricate reporting requirements. He poses questions about the reporting obligations for anonymous crypto donations and suggests that the vague nature of the guidelines could pose difficulties for filers.
To address these concerns, Coin Center proposed an alternative approach in August, advocating for the establishment of a de minimis exemption for crypto transactions. The exemption would provide relief from reporting requirements for smaller transactions, alleviating the burden on both individuals and the government. Coin Center also emphasized the need to reconsider the application of reporting requirements for second parties involved in crypto transactions.
The increased complexity of crypto tax reporting, coupled with the potential for legal ramifications, underscores the importance of clear and practical guidelines from the IRS. As the crypto industry navigates these challenges, stakeholders await further clarification to ensure seamless compliance with the evolving regulatory landscape.
