June 21, 2024

US government backtracks on its Crypto Tax Reporting Rule

The United States Treasury Department and Internal Revenue Service (IRS) recently announced revisions to their crypto tax reporting rule. It originally mandated extensive reporting for crypto transactions exceeding $10,000.

The Treasury now informs businesses that they do not have to follow the same reporting requirements as cash for crypto transactions. However, this will only be the case until formal crypto regulations are introduced into the country.

US Government Announces Implementation of Regulations Will Come First

In a recent statement, the US Treasury Department outlines that digital asset transactions will not be subject to the same reporting requirements as cash, until regulations are introduced into the country.

“The Infrastructure Investment and Jobs Act revised the rules that require taxpayers that are engaged in a trade or business to report receiving cash of more than $10,000 by considering digital assets to be cash.”

The regulators aim to release regulations that will furnish extra details and procedures for reporting the receipt of digital assets. Additionally, the public will have the opportunity to offer feedback through written submissions and participation in a public hearing.

The reversal of this rule comes only a couple of weeks after initially introducing it publicly.

On January 2, BeInCrypto reported that US citizens who receive $10,000 or more in crypto now have an obligation to report the transaction. The obligation includes reporting names and address, with a 15 day deadline.

Read more: How to Reduce Your Crypto Tax Liability: A Comprehensive Guide

US Government Tightens Grip on Crypto Taxpayers

The government, in collaboration with the IRS, is actively exploring methods to ensure that crypto holders in the US accurately report and pay the appropriate amount of tax on their profits.

Additionally, recent rule changes appear to be aiming to standardize crypto reporting in a manner similar to traditional assets.

In August 2023, BeInCrypto reported that the regulators introduced proposed regulations which would require brokers of digital assets to report certain sales and exchanges.

This aligns tax reporting on digital assets with securities and other financial instruments.

In recent years, the US government’s stance on crypto has sparked controversy. Numerous industry leaders assert that the government has adopted a regulation-by-enforcement approach. This has resulted in legal actions against major crypto exchanges such as Binance and Coinbase.

However, both exchanges argue that the lack of regulatory clarity makes it challenging. Especially, to discern the optimal operational strategy for their businesses.

Read more: The Ultimate US Crypto Tax Guide for 2023


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