A 2024 IRS rule requiring detailed reporting for cryptocurrency transactions over $10,000 creates new compliance hurdles for brokers and users.

In 2024, the Internal Revenue Service (IRS) will implement new rules requiring detailed reporting of digital asset transactions over $10,000. The move stems from the bipartisan infrastructure bill signed by President Joe Biden in 2021 and targets cryptocurrency brokers, forcing them to disclose comprehensive transaction details to the IRS.

Brokers under scrutiny

The legislation targets cryptocurrency exchanges and custodians, requiring them to report transactions above a specified threshold. These entities must provide the IRS with the sender's name, address and Social Security number within 15 days. The requirements were initially set to be implemented in January 2023 in an effort to close the tax gap, and now businesses will have to submit reports in 2024.

Compliance Challenges

Jerry Brito, executive director of Coin Center, expressed concerns about the practicality of these new rules. He stressed that without clear guidance from the IRS, users and brokers may face difficulties in complying with the regulations. There is a risk of inadvertent non-compliance, which could result in far-reaching legal consequences.

One of the key areas of ambiguity revolves around cryptocurrency miners and validators. When these individuals receive block rewards exceeding $10,000, the question arises about who they should report information to. Additionally, the challenge extends to decentralized exchanges, where identifying the other party in a transaction is inherently complex.

The situation becomes more complicated with anonymous donations. For example, when an entity receives Bitcoin or Ether through a public address without identifying information, reporting entities are in trouble. Moreover, they cannot comply with reporting requirements when the sender's details are unknown.

The IRS's Position and Future Direction

While the IRS has expanded reporting requirements for digital asset transactions since 2019, recent developments in the bipartisan infrastructure law have heightened scrutiny. Coin Center suggests a minimal exemption for small transactions as a potential solution. The crypto community awaits further guidance from the IRS to effectively navigate these new reporting environments. #加密货币监管  IRS #IRS