Recently, the Infrastructure Bill signed by U.S. President Joe Biden has partially come into effect. One crucial provision in the new bill mandates that digital asset transactions exceeding $10,000 in value must be reported to the Internal Revenue Service (IRS) in the United States. The bill, signed by President Biden in 2021, showcases bipartisan cooperation and underscores the nation's commitment to infrastructure development.
According to the new legislation, the reporting scope for brokers has been expanded, requiring numerous cryptocurrency exchanges and custodial entities to report crypto transactions exceeding $10,000 to the IRS. However, some lawmakers have expressed concerns about the reporting requirements, suggesting that brokers may find it challenging or impossible to collect the necessary information. As a result, additional legislation has been proposed to "rectify" these requirements.
As per the legislation, cryptocurrency brokers are required to report individual information related to transactions, including the sender's name, address, and social security number, to the IRS within 15 days. This measure aims to narrow the tax gap in the United States and was originally planned to take effect in January 2023, with businesses set to submit reports to the IRS in 2024.
However, concerns about the reporting requirements have been voiced by Jerry Brito, the executive director of Coin Center. He believes that many users may find it "difficult to comply" with the reporting requirements without IRS guidance, and despite best efforts to comply with the law, reporters may face the risk of serious crimes.
Brito raises critical questions: "If miners or validators receive block rewards exceeding $10,000, to whom should they report the name, address, and social security number? If you engage in a decentralized on-chain crypto-to-crypto trade worth $10,000, to whom should you report? And how is the specific quantity of a particular cryptocurrency to be measured against the $10,000 threshold?"
He also emphasizes a tricky issue: "The real thorny nature of this requirement becomes evident when someone makes such a donation. But sending Bitcoin or Ethereum to our public address can be done anonymously. In this case, who do we list as the sender?"
To address the ambiguity in reporting guidelines and the issue of not requiring the government to demand second-party application of crypto transactions, Coin Center proposed a suggestion to the IRS in August – establishing a de minimis exemption for cryptocurrency transactions. However, despite the IRS requiring U.S. taxpayers to report specific digital asset transactions since 2019, the broadening of these requirements under the Infrastructure Bill may make reporting in 2024 an arduous task.
For more analysis, please follow Aibit's media account for real-time updates! This article is for reference only, does not represent any position, and is not intended as investment advice. Investment is risky, caution should be exercised.
Facebook: https://www.facebook.com/aibitcom
X: https://twitter.com/aibitcom
Telegram (CN): https://t.me/aibitcom_cn
Telegram (EN): https://t.me/aibitcom
Telegram (Announcements): https://t.me/aibitcom_announcements
Discord: https://discord.com/invite/aibitcom
Medium: https://medium.com/@aibitcom
Youtube: https://www.youtube.com/@aibitcom