As per an announcement made by IRS or the internal revenue service (USA)
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.
Section 6050I(a)clearly states any person who is the recipient of cash greater than $10000 and who is engaged in trade or business and who receives this amount as part of business proceeds needs to report the transaction as per IRS regulation.
Understanding section 6050I(a)
Under section 6050I(a), any person (the recipient) engaged in a trade or
business who, in the course of that trade or business, receives cash in excess of
$10,000 in one transaction (or two or more related transactions) must file an information
return reporting the receipt of cash. The regulations require that the return must be filed
on Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or
Business, within 15 days of the receipt of cash and report specified information.
The new IRS announcement dated 16th Jan 20204 pertains only to digital asset reporting which also were previously put in the same category as cash transactions.
The IRS announcement can be accessed here
However cash transactions would still need to be reported as stated earlier.
This is transitional arrangement
It may be noted that this is only a transitional arrangement till new guidelines are issued with more clarity.
This stoppage in reporting is only a stopgap arrangement should help avoid errors in reporting.
This proactive step should be seen as positive as it is a step in the direction of bringing more clarity to the process of reporting.
Deference is not exception
As per the news the IRS has stated that business would be not required to currently report crypto transactions that are more than $10,000 in value.
This deference is being made until the IRS or the Internal Revenue service comes out with clear guidelines in the matter.
As per the January 16th,2024 statement from the IRS it would review and publish a regulatory framework
in accordance to the Infrastructure Investment and Jobs Act (IIJ Act)
Currently the IIJ Act would require that the taxpayer reports any transaction that is more than $10,000 in cash within a time frame of 15 days. According to asset classification Digital assets were considered to be cash as per Section 6050I of the Act.
As per the IRS both the Internal Revenue service and the Treasury would be issuing more clear regulation about asset reporting in the future.
It is believed that they would be seeking inputs from the public and those involved in this regard.
How is this good news for crypto?
Erroneous reporting of taxes and filling lengthy forms cost both time and money.
By eliminating this reporting in order to introduce more transparency and clarity into the system the IRS is taking a positive step towards tax reporting pertaining to crypto.
Good news for crypto investors in USA
Looks like the year 2024 is going to be good for crypto and those investing into this asset class specially for those in USA
First the SEC approving close to a dozen bitcoin ETF's
This made it possible for investors to get the ability to ride the Bitcoin wave without having to own a bitcoin.
It may be noted that Though investing in Bitcoin and being invested in a Bitcoin ETF are two entirely different things.
Now this news from the IRS about crypto receipt reporting for businesses helps introduce an ease of accepting crypto in the business.
This piece of good news would make the crypto investors in USA smile and perhaps take a sigh of relief that the IRS is becoming more citizen friendly who deal with crypto.