Crypto Investors Beware: IRS Crypto Tax Reporting Rules for $10k+ Transactions Now in Effect

cryptonews.com:

The controversial crypto tax reporting requirements within the bipartisan infrastructure bill signed into law in 2021 are now in effect as of January 1.

These new Internal Revenue Service (IRS) rules mandate that cryptocurrency brokers report personal information on digital asset transactions over $10,000, including customers’ names, addresses, and social security numbers, within 15 days.

While the goal is increased transparency and reduced tax avoidance, the rules have drawn criticism for being vague and difficult to comply with.

According to Jerry Brito, executive director at cryptocurrency policy think tank Coin Center, many crypto users “will find it difficult to comply” with the “tricky” reporting requirements without further IRS guidance.

For investors transacting through centralized exchanges like Coinbase or Kraken, compliance will fall on the platform operator. But for peer-to-peer deals or mining proceeds, the responsibility shifts to the individual.

New crypto tax reporting obligations took effect on Jan 1.

If you receive $10k or more in crypto you now have an obligation to report the transaction (including names, addresses, SS numbers, etc.) to the IRS within 15 days under threat of a felony charge. pic.twitter.com/wyRsfJEpMo

— Jerry Brito (@jerrybrito) January 2, 2024

Brito raised questions about specifics such as which parties will be responsible for reporting in scenarios like miner rewards over $10,000 and decentralized on-chain exchanges. He argued that without more clarity, some filers may attempt compliance but risk accidentally committing a felony in the process.

“If you engage in an on-chain decentralized exchange of crypto for crypto and you therefore receive $10,000 in cryptocurrency, who do you report?”