Weeks after confusion and anger spread across the cryptosphere over concerns that a new law could send Americans to jail for failing to immediately report crypto transactions over $10,000, the IRS has clarified that that the measure is not currently being enforced—and won’t be for some time.
“Businesses… 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 IRS and the Treasury Department said in a joint statement on Tuesday. “This particular provision requires Treasury and the IRS to issue regulations before it goes into effect.”
The announcement officially confirms what policy and tax experts had been saying for weeks: that even though the law in question is technically supposed to go into effect beginning this year, it will not be enforced until a lengthy period of public comment and review takes place, which can sometimes last years.
Questions still remain about the law, though—namely, who it implicates. The fine print of the measure states that any American who receives over $10,000 worth of crypto in the course of “trade or business” must report identifying information about who paid them that money. The same laws have long been enforced for cash transactions.
Report Crypto Trades Over $10K to IRS or Face Jail? It’s Complicated
The opening days of 2024 have seen a resounding call echo across the far reaches of the cryptosphere: The IRS is coming! The IRS is coming! The hullabaloo was triggered by a circulated portion of a 2021 federal infrastructure law that states that beginning January 1, 2024, key details pertaining to certain crypto payments over $10,000—including the name, address, and social security number of the payer—must be reported to the IRS under penalty of felony criminal charges. Worry soon spread among...
“Trade or business” typically refers to transactions made in the course of one’s employment. Paying someone for coding work in ETH certainly counts; flipping NFTs or day trading meme coins likely doesn’t.
But there are many potential snags to treating crypto like cash. Those who receive payments from DAOs may not be able to list an individual payer whose home address they know. Crypto stakers—if staking is in fact considered a primary business—will run into a similar problem listing Ethereum’s social security number, given that it’s a decentralized network.
Did You Forget to Pay Crypto Taxes? IRS Is Letting You Off the Hook—Kinda
Millions of Americans who have yet to pay their taxes for 2020 or 2021 are now set to receive relief from the IRS—and if you’ve failed to report your crypto transactions from those years, you could also stand to benefit. The IRS has announced that it will waive its standard “failure to pay” penalty for over 4.7 million tax filers who haven’t paid their 2020 or 2021 taxes—a fee equivalent to 0.5% of a filer’s unpaid taxes, charged for every month they fail to pay after a filing deadline. The IRS...
For those reasons and others, crypto advocacy group Coin Center sued the Treasury Department and the IRS last year, arguing the new statute is unconstitutional. The case is currently on appeal.
Edited by Andrew Hayward
