The Treasury Department and Internal Revenue Service have recently issued an announcement informing businesses that they 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 Infrastructure Investment and Jobs Act revised “the rules that require taxpayers that are engaged in a trade or business to report receiving cash of more than $10,000 by considering digital assets to be cash.”
Announcement 2024-4PDF provides transitional guidance “as Treasury and the IRS implement the new provisions.”
This particular provision requires Treasury and the IRS “to issue regulations before it goes into effect.”
The announcement reportedly does “not affect the rules in effect before the Infrastructure Investment and Jobs Act for cash received in the course of a trade or business, which must be reported on Form 8300, Report of Cash Payments over $10,000 Received in a Trade or Business, within 15 days of receiving the cash.”
Treasury and the IRS intend to “issue proposed regulations to provide additional information and procedures for reporting the receipt of digital assets, giving the public an opportunity to comment both in writing and, if requested, at a public hearing.”
As covered in August of 2023, the US Department of Treasury and the Internal Revenue Service (IRS) have announced proposed rules for the handling of digital assets and the sale and exchange of crypto.
In a public statement, the two federal entities said the move was an effort to “crackdown on tax cheats” while making it easier for taxpayers to know what they must pay on the transactions.
The statement explains that under current law, taxpayers owe tax on gains and may be entitled to deduct losses on digital assets when sold, but for many taxpayers, it is difficult and costly to calculate their gains. As proposed a new form, 1099-DA, will be utilized to file to the feds regarding taxes on digital asset transactions. Brokers, or platforms enabling digital asset transactions, would be required to report any sales of digital assets starting in 2026 for transactions taking place in 2025.
The 282-page document with the new regulations is available here.
The Chairman of the House Financial Services Committee, Patrick McHenry, slammed the proposal as another attack on digital asset innovation. McHenry stated (in August of last year):
“The notice of proposed rulemaking on digital asset reporting requirements is another front in the Biden Administration’s ongoing attack on the digital asset ecosystem,” said Chairman McHenry. “Following the passage of the Infrastructure Investment and Jobs Act, numerous lawmakers of both parties made clear that any proposed rule must be narrow, tailored, and clear. I’m glad to see the delayed effective date and exemptions for other activities in the proposed rule mirror my bipartisan bill, the Keep Innovation in America Act. However, it fails on numerous other counts. Any additional rulemakings related to the other sections from the law must adhere to Congressional intent.”