CRYPTO REPORTING DELAYED:

Treasury and the IRS announced that businesses will not be required to report some cryptocurrency and other digital asset transactions until the government releases proper regulations.

Section 6050I, amended by the Infrastructure Investment and Jobs Act in November 2022, now states that digital assets valued at $10,000 or more can be considered cash. Therefore, any person engaging in a trade or business that receives more than $10,000 in cryptocurrency must file a Form 8300. Failure to do so can result in not only civil consequences but also felony charges.

Some observers have raised concerns that the threat of criminal charges will freeze “a lot of healthy crypto behavior.”

While cryptocurrency is treated as cash within the context of section 6050I, cryptocurrency is generally treated as property for federal tax purposes, as established in Notice 2014-21, 2014-16 IRB 938.

The changes to section 6050I were initially supposed to be enacted after December 31, 2023.

The announcement 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.

Treasury officials have noy confirmed when proposed regulations on section 6050I will be published, but the IRS said in a January 16 release that it plans to issue regs providing “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.”