In a significant development, the Internal Revenue Service (IRS) has decided that U.S. businesses are not required to report cryptocurrency transactions exceeding $10,000 until the tax agency provides a new regulatory framework. This decision follows a revision of the Infrastructure Investment and Jobs Act (IIJ Act) by the Treasury and the IRS, as announced on Jan. 16.
Temporary Relief for U.S. Businesses
The new rules, effective from Jan. 1, mandated all U.S. businesses to report cryptocurrency transactions above $10,000. However, the IRS has opted not to enforce this rule temporarily, pending the release of comprehensive regulatory guidelines.
The IRS clarified, stating, “At this time, digital assets are not required to be included when determining whether cash received in a single transaction meets the reporting threshold.”
Challenges and Concerns
The initial regulations faced criticism from the crypto community, with concerns raised about the difficulty of compliance without further guidance. Jerry Brito, Coin Center executive director, highlighted potential challenges, suggesting that many filers might find it difficult to comply and risk being charged with a felony.
Infrastructure Investment and Jobs Act (IIJ Act) Requirements
The IIJ Act requires taxpayers to report cash receipts exceeding $10,000 within 15 days of the transaction. While digital assets were initially considered cash under Section 6050I of the Act, this won’t impact U.S. cryptocurrency users for now.
Future Regulatory Steps
Both the IRS and the Treasury have committed to proposing regulations related to digital asset reporting. However, the timeline for introducing these regulations remains undisclosed. The public will also have an opportunity to provide input on the formulation of these regulations.
Positive Reception Amidst Concerns
Digital asset advocates, including the Blockchain Association, view this development as a “positive step forward.” Despite support for the temporary relief, the U.S. House Committee emphasized underlying issues with the “poorly constructed digital asset reporting requirements” implemented on Jan. 1.
