IRS Announces $10,000 Reporting Rule Won’t Apply to Crypto for Now

In a file photo, a postal worker is seen putting stamps on envelopes heading to the IRS (Monika Graff/Getty Images)

The Internal Revenue Service (IRS) said that a new reporting rule set to go into effect in 2024 doesn’t apply to cryptocurrencies “until regulations are issued.”

In a news release on Jan. 16, the tax agency said that 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.”

“This announcement provides transitional guidance … and clarifies that at this time, digital assets are not required to be included when determining whether cash received in a single transaction (or two or more related transactions) meets the reporting threshold.”

Both the IRS and the Treasury said they will propose new regulations replying to reporting digital assets, including cryptocurrency, at a later time, allowing for a public commenting period. No date was provided.

“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, which must be reported on Form 8300, Report of Cash Payments over $10,000 Received in a Trade or Business, within 15 days of receiving the cash,” the announcement said.

In 2021, Congress passed an infrastructure and jobs measure that added digital assets to the list of property targeted as cash, effecting as of Dec. 31 of last year. Regulations, however, haven’t yet been published in the Federal Register. The IRS has long required merchants to use Form 8300 for transactions of more than $10,000, but the measure expanded the definition to cash to digital assets.

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“As with cash transactions, businesses that receive cryptoassets with a fair market value of more than $10,000 would also be reported on,” the Treasury Department said in a proposal in 2021 before the measure was passed.

That reporting will have to include the name, address, and Social Security number of the sender under the IRS rules. Also included will be the date, amount, and reason for the transaction.

The rule has faced significant criticism from cryptocurrency organizations and companies.

It was challenged in court, namely by industry organization CoinCenter, which argued that those rules started to apply to cryptocurrency transactions on Jan. 1, 2024—or about two weeks before the latest IRS notice. The group said that those who fail to file a report within 15 days of a transaction might face felony charges.

“Unfortunately, the new year also brings a new law that is not only unconstitutional but also virtually impossible to comply with as a result of inaction from the IRS. It is important that every crypto user is aware of the pitfalls that have been created as this law is now in effect,” the group wrote in early January, noting that it challenged the rule in court in 2022.

The group noted that there are serious problems and looming questions with reporting large cryptocurrency transfers.

“More to the point, where do you even send your report? The law says that one must make a report ‘in such form as the Secretary [of the Treasury] may prescribe,’” it said. The Treasury also requires cash to be reported under Form 8300, but, according to CoinCenter, the Treasury or IRS have not “explained how cryptocurrency, which is now a form of ‘cash’ under the law, should be reported on this form.

“It’s unclear what will happen. Will the IRS issue guidance or an updated form and submission process anytime soon? If not, people who receive qualifying amounts will find themselves in an odd position and will no doubt try to comply by notifying the IRS in any number of ways just to demonstrate good will,” the group warned.

CoinCenter added that Form 8300 is also sent to the U.S. Financial Crimes Enforcement Network or FinCEN, and argued that the federal agency does not have the authority to demand information on cryptocurrency transactions.

Reuters contributed to this report.