New IRS Rule Targets Businesses Using Crypto

By Vince • January 3, 2024 11:49 am • Comments

A new IRS rule has gone into effect for this year that has targeted businesses engaging in crypto transactions.

According to that rule, businesses processing $10,000 or more in crypto or digital asset transactions must report those transactions to the IRS within 15 days or potentially be slapped with a felony.

This new law only applies to businesses or sole proprietor-style businesses and does not apply to individuals.

Trending: India Arrests An Administrator Of Cryptocurrency Exchange On Request Of U.S. Authorities

However, many are pointing out that it is incredibly difficult to ensure compliance on this issue. Decentralized exchanges, crypto tumblers, and anonymous wallets exist.

Could this simply be another case of lawmakers asking to speak to the Bitcoin CEO? Here’s what we currently know about the new reporting rule:

The Clinton Donnelly Show went into further detail on how large crypto firms like Coinbase file their taxes with the American IRS every single year.

Coin Telegraph provided more details on the new rule:

The bill mandates crypto brokers to report personal information on transactions to the IRS, including the sender’s name, address and social security number, within 15 days.

The requirements, aimed at reducing the size of the tax gap in the United States, were initially scheduled to take effect in January 2023, having companies send reports to the IRS in 2024.

BSCN broke down the new rule and the potential concerns:

– Digital asset transactions worth more than $10,000 are now required to be reported to the IRS according to a new Infrastructure bill signed by Biden.

– Many lawmakers suggested additional legislation to “fix” the reporting requirement, claiming that the information required from brokers would be difficult or impossible to collect.

– The bill mandates crypto brokers to report personal information on transactions to the IRS, including the sender’s name, address and social security number, within 15 days.

– Issues raised concern miners receiving block rewards, swaps from a DEX, donations, and changes in value in assets.

– The IRS began requiring U.S. taxpayers to report on digital asset transactions in 2019, but the expansion of these requirements under Biden’s infrastructure law could make reporting difficult in 2024.

Blockworks explained:

In order to determine whether a DAO contributor falls under a “trade or business,” some questions to consider could include:

Is contributing to the DAO your full-time, self-employed job? Is this your main source of income? Do you do this full-time throughout the year?

“If the answer is “yes” to all these above (there could be other qualitative questions depending on the situation), you run a “trade or business” and could be subject to 6050I,” Chandrasekera said.

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