New Crypto Tax Law Takes Effect, Coin Center Claims Compliance is Impossible
A prominent crypto advocacy group, Coin Center, has issued a press release stating that new crypto tax regulations have come into effect, which they believe are impossible to comply with. The Infrastructure Investment and Jobs Act, passed by Congress in 2021, requires individuals who receive more than $10,000 in crypto assets to report the transaction to the IRS.
Coin Center argues that the law is unclear and unconstitutional. They point out that complying with the law may be practically impossible due to unanswered questions. For example, it is unclear who should be reported if a miner or validator receives block rewards exceeding $10,000. Additionally, there is ambiguity regarding how to determine if an amount of cryptocurrency is equivalent to more than $10,000.
Under the new law, crypto assets are classified as cash. Therefore, any transactions involving digital assets over $10,000 must be reported to the IRS and FinCEN via Form 8300 – the form for disclosing cash gains. However, Coin Center highlights that FinCEN lacks the authority to collect reports on crypto transactions and it remains unclear how crypto assets should be listed on Form 8300.
Hot Take: Challenges of New Crypto Tax Law
The implementation of the new crypto tax law raises significant challenges for individuals in the crypto space. Coin Center’s claim that compliance is impossible reflects the lack of clarity surrounding reporting requirements and definitions within the legislation. Without clear guidance from regulatory bodies like the IRS and FinCEN, individuals may struggle to meet their obligations under the law. This situation underscores the need for greater regulatory clarity and specificity regarding taxation in the crypto industry.
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