According to a report from Cointelegraph, Coin Center executive director Jerry Brito says it’s “unclear how one can comply” with the crypto tax reporting guidelines in 2024.
The infrastructure bill signed into law by President Joe Biden has ushered in new regulations for the digital asset industry in the United States. Notably, several provisions require individuals involved in digital asset transactions worth over $10,000 to report these transactions to the Internal Revenue Service (IRS).
The bipartisan infrastructure bill that was passed by Congress and signed by President Biden in 2021 has expanded the requirements for brokers to report crypto transactions greater than $10,000 to the IRS. This has led to many crypto exchanges and custodians being required to comply with the new regulations. Since the bill's passage, several lawmakers have suggested that additional legislation may be needed to address concerns that the reporting requirements may be difficult to collect.
Under the bipartisan infrastructure bill, crypto brokers are required to report personal information on transactions to the IRS, including the sender's name, address, and social security number, within 15 days. The aim of these requirements is to reduce the size of the tax gap in the United States.
Initially, the regulations were scheduled to take effect in January 2023, with companies sending reports to the IRS in 2024.
According to Coin Center executive director Jerry Brito, many users “will find it difficult to comply” with the reporting requirements without guidance from the IRS. He speculated that individuals who file their taxes may make an effort to comply with the law, but there is still a possibility of being charged with a felony.
“[I]f a miner or validator receives block rewards in excess of $10,000, whose name, address, and Social Security number do they report?” said Brito. “If you engage in an on-chain decentralized exchange of crypto for crypto and you therefore receive $10,000 in cryptocurrency, who do you report? And by what standard should you measure whether an amount of a particular cryptocurrency is equivalent to more than $10,000?”
Brito added:
“The really tricky nature of this requirement will become clear when someone makes such a donation, but does so anonymously by simply sending us Bitcoin or Ether to our public addresses. Who could we possibly list as the sender in that case?”
In August, Coin Center proposed that the IRS establish a de minimis exemption for crypto transactions to address the lack of clarity in reporting guidelines. U.S. taxpayers have been required to report on digital asset transactions since 2019, but the bipartisan infrastructure law could make reporting even more challenging by 2024. This solution would help alleviate some of the pressure on taxpayers and second parties involved in crypto transactions.
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