IRS Drops the Hammer: Bitcoin and XRP Transactions Over $10,000 Require Reporting – Investor Implications

10 months ago 13

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Digital asset transactions exceeding $10,000 must now be reported to the IRS, a provision included in the recent infrastructure bill.
The bipartisan Keep Innovation in America Act, introduced by McHenry and Ryan, seeks to refine these new reporting requirements, aiming to balance regulatory needs with innovation in the digital asset space.

A press release by the Financial Services Committee highlights McHenry’s leadership in a bipartisan legislative effort to address new digital asset reporting requirements. The infrastructure bill, signed into law by U.S. President Joe Biden, includes provisions mandating the reporting of digital asset transactions over $10,000 to the Internal Revenue Service (IRS).

A Bloomberg report discusses the U.S. government’s challenges in implementing tax collection measures on digital assets. The Biden administration is considering delaying the enforcement of rules requiring crypto brokers and exchanges to collect detailed information on client trades. Initially set to begin in January 2023, with reporting to the IRS starting in 2024, these requirements aim to narrow the tax gap.

The enforcement of this public law was solidified on December 31, 2023, with its provisions taking effect from January 1, 2024. The Executive Director of Coin Center, a DC-based crypto think tank, detailed in a tweet that If we receive $10k or more in crypto, we now have an obligation to report the transaction (including names, addresses, SS numbers, etc.) to the IRS within 15 days under threat of a felony charge.

New crypto tax reporting obligations took effect on Jan 1.

If you receive $10k or more in crypto you now have an obligation to report the transaction (including names, addresses, SS numbers, etc.) to the IRS within 15 days under threat of a felony charge. pic.twitter.com/wyRsfJEpMo

— Jerry Brito (@jerrybrito) January 2, 2024

While the IRS has required U.S. taxpayers to report digital asset transactions since 2019, the expanded requirements under the bipartisan infrastructure law may complicate reporting in 2024.

This development was initially announced at the end of last year. Republican Leader Patrick McHenry and Tim Ryan introduced the bipartisan Keep Innovation in America Act, aimed at refining the new digital asset reporting requirements and providing clarity for innovators in the field.

The Financial Services Committee highlighted earlier via Twitter the introduction of the ‘Keep Innovation in America Act’ by Republican Leader Patrick McHenry and Tim Ryan. This bipartisan legislation aims to adjust the new digital asset reporting requirements, providing much-needed clarity and simplification for innovators in the rapidly evolving digital asset sector.

Republican Leader @PatrickMcHenry and @RepTimRyan introduced the bipartisan Keep Innovation in America Act.