- IRS has implemented a new tax reporting rule.
- Crypto advocacy group CoinCenter has contested the new IRS rule, highlighting challenges in compliance.
A recent move by the Internal Revenue Service (IRS) has stirred controversy within the crypto community, as the agency now mandates reporting for transactions involving at least $10,000 in cryptocurrencies. Effective since January 1, 2024, this regulation stems from the infrastructure bill signed into law by U.S. President Joe Biden in November 2021.
Under this new tax reporting framework, recipients of crypto transactions exceeding $10,000 must submit transaction details to the IRS. This information encompasses the sender’s name, address, Social Security number (SSN), and specifics on the transaction, including the amount, date, and nature.
Penalties for Non-Compliance
Failure to file a report within 15 days of a qualifying transaction carries the risk of felony charges, emphasizing the stringent nature of the rule. The self-executing nature of the regulation means it is immediately operational and enforceable without requiring additional action.
Crypto advocacy group CoinCenter has raised objections to the new reporting obligation, asserting that compliance poses challenges for many due to its purported straightforward but unconstitutional nature. The group highlights concerns for blockchain miners and validators who receive block rewards exceeding $10,000, as they lack an identifiable sender for inclusion in the report. Similarly, those engaging in crypto-for-crypto swaps through decentralized exchanges face difficulty reporting an identifiable sender.
Ambiguities and Legal Challenges
CoinCenter emphasizes the lack of clarity in determining the value of specific cryptocurrencies, further complicating compliance. Additionally, the group raises issues about receiving donations from anonymous contributors, citing the challenges of reporting sender information.
In response to these concerns, CoinCenter filed a lawsuit against the U.S. Treasury in June 2022, challenging the constitutionality of the rules. The case is still in court, marking an ongoing legal battle over the controversial tax reporting requirements in the crypto sphere.
