New Crypto Tax Law That’s ‘Impossible To Comply With’ Now in Effect, Says Coin Center – Here’s What It Is
A prominent crypto advocacy group says that new crypto tax regulations have come into effect that are impossible to comply with.
In a new press release, Coin Center says that The Infrastructure Investment and Jobs Act, which passed Congress in 2021, came into effect on January 1st and will force anyone who receives more than $10,000 in crypto assets to report the transaction to the Internal Revenue Service (IRS).
According to Coin Center, crypto users have only 15 days to report their transactions before they could be guilty of a felony. However, the crypto advocacy group says that not only is the law unconstitutional and unclear, but abiding by it might be an outright impossibility.
“The problem is many will find it difficult to comply with what is supposedly a straightforward (if unconstitutional) new obligation. For example, if a miner or validator receives block rewards in excess of $10,000, whose name, address, and Social Security number do they report?
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? And by what standard should you measure whether an amount of a particular cryptocurrency is equivalent to more than $10,000?
The law is silent on this matter and the IRS has not issued any guidance answering these and other questions.”
The new law categorizes crypto assets as cash, and therefore transactions over $10,000 involving digital assets must be reported to the IRS and FinCEN (Financial Crimes Enforcement Network) via Form 8300 – the form for disclosing cash gains.
However, according to Coin Center, FinCEN has no authority to collect reports on crypto transactions, so one cannot be obligated to send such reports to them. Furthermore, it’s unclear how exactly crypto assets are to be listed on the form.
“The Secretary requires ‘cash’ to be reported using Form 8300, but has not explained how cryptocurrency, which is now a form of ‘cash’ under the law, should be reported on this form.
More importantly, Form 8300 is today sent to FinCEN as well as the IRS. Unlike with physical cash transactions, FinCEN has no authority to collect reports concerning cryptocurrency transactions, so one cannot be required to send Form 8300 there.”