New Crypto Tax Reporting Obligations Take Effect on January 1
Starting on January 1, a new tax reporting law has come into force in the United States. Under the Infrastructure Investment and Jobs Act, individuals who receive $10,000 or more in cryptocurrency in the course of their trade or business must file a report with the Internal Revenue Service (IRS) within 15 days. Failure to comply could lead to felony charges. Non-profit organization Coin Center has raised concerns about the law’s constitutionality and is currently challenging it in court. The organization also highlighted the lack of guidance from the Treasury Department on how to comply with the new regulations.
Challenges and Uncertainties Surrounding Compliance
Coin Center’s executive director, Jerry Brito, has pointed out several challenges and uncertainties associated with complying with the new tax reporting requirements. For example, it is unclear who should be reported as the recipient of block rewards exceeding $10,000 and how to determine the equivalent value of a particular cryptocurrency. Brito also questioned how donations made anonymously to public addresses should be reported and emphasized the Treasury Department’s failure to provide clear answers to these questions.
No Guidance or Reporting Form Provided by the IRS
Concerns have been raised about the lack of guidance from the Internal Revenue Service (IRS) regarding the new crypto tax reporting obligations. Brito highlighted that there is currently no form provided by the Treasury Department for reporting cryptocurrency transactions, and the IRS has not addressed the reporting of crypto on existing forms. The lack of clarity and specific instructions from the authorities further complicates the compliance process for individuals and businesses.
The Law Applies to Individuals and Businesses
The new tax reporting law applies to both individuals and businesses. Any individual who receives $10,000 or more in cryptocurrency in the course of their trade or business must comply with the reporting requirements. This includes miners, day traders, and even non-fungible token (NFT) artists. However, the definition of “trade or business” has not been clearly defined, leaving individuals and businesses unsure about whether they fall under the scope of the law.
Hot Take: Compliance Challenges and Lack of Guidance
The implementation of the new crypto tax reporting law in the United States has raised concerns and uncertainties in the cryptocurrency community. With the requirement to report transactions of $10,000 or more within 15 days, individuals and businesses face challenges in determining who should be reported as recipients, how to measure the equivalent value of cryptocurrencies, and how to report anonymous donations. The lack of guidance from the Treasury Department and the absence of a specific reporting form from the IRS further complicate compliance. It remains to be seen how these issues will be addressed and whether the law will undergo any amendments in the future.
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