tl;dr
The IRS has clarified that the new law regarding crypto transactions over $10,000 is not currently being enforced and won’t be for some time. The law requires a lengthy period of public comment and review before it goes into effect, and questions remain about who it implicates, particularly in regar...
The IRS has clarified that the new law regarding crypto transactions over $10,000 is not currently being enforced and won’t be for some time. The law requires a lengthy period of public comment and review before it goes into effect, and questions remain about who it implicates, particularly in regard to "trade or business" transactions. There are potential challenges in treating crypto like cash, including reporting identifying information and potential constitutional issues, leading to a lawsuit from crypto advocacy group Coin Center.
Weeks after confusion and anger spread across the cryptosphere over concerns that a new law could send Americans to jail for failing to immediately report crypto transactions over $10,000, the IRS has clarified that that the measure is not currently being enforced—and won’t be for some time. “Businesses… do not have to report the receipt of digital assets the same way as they must report the receipt of cash until Treasury and IRS issue regulations,” the IRS and the Treasury Department said in a joint statement on Tuesday. “This particular provision requires Treasury and the IRS to issue regulations before it goes into effect.” The announcement officially confirms what policy and tax experts had been saying for weeks: that even though the law in question is technically supposed to go into effect beginning this year, it will not be enforced until a lengthy period of public comment and review takes place, which can sometimes last years.
Questions still remain about the law, though—namely, who it implicates. The fine print of the measure states that any American who receives over $10,000 worth of crypto in the course of “trade or business” must report identifying information about who paid them that money. The same laws have long been enforced for cash transactions. But there are many potential snags to treating crypto like cash. Those who receive payments from DAOs may not be able to list an individual payer whose home address they know. Crypto stakers—if staking is in fact considered a primary business—will run into a similar problem listing Ethereum’s social security number, given that it’s a decentralized network. For those reasons and others, crypto advocacy group Coin Center sued the Treasury Department and the IRS last year, arguing the new statute is unconstitutional. The case is currently on appeal.
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