On Tuesday, the U.S. Internal Revenue Service (IRS) and Treasury provided transitional guidance on digital asset reporting, postponing enforcement pending regulation issuance.
IRS Temporarily Halts Enforcement of Digital Asset Reporting
The U.S. Treasury Department and the Internal Revenue Service (IRS) have announced a temporary reprieve for businesses in reporting certain digital asset transactions. The latest guidance, outlined in Announcement 2024-4, comes as a relief to many in the digital currency space.
As reported earlier, the Infrastructure Investment and Jobs Act, which recently revised the rules for taxpayers engaged in trade or business, had expanded the definition of cash to include digital assets. This meant businesses were required to report any receipt of digital assets over $10,000, akin to cash transactions. However, the new announcement provides transitional guidance, delaying these requirements until further regulations are issued.
Despite this temporary relief, traditional cash transaction reporting rules remain unaffected. Businesses must continue to report cash transactions over $10,000 within 15 days of the transaction.
The Treasury and IRS have clarified their intent to issue proposed regulations for digital asset reporting. These proposals will offer additional details and procedures, with an opportunity for public comment and potential public hearings.
The tax regulator’s decision to step back temporarily has been welcomed by many. The Blockchain Association stated in a post on X that this reprieve is, “a positive step forward given its impossibility and breadth of reporting required.”
The Republicans on the U.S. House Committee on Financial Services posted on social media, echoing the Blockchain Association:
We welcome this stopgap action by @IRSnews to clarify the forthcoming regulations on section 6050I for digital assets. However, this does not fix the underlying problems with the poorly constructed digital asset reporting requirements.
The IRS has not specified a timeline for introducing the proposed regulations, but the opportunity for public input suggests a collaborative approach toward shaping the future of digital asset regulation.
The Financial Services GOP X account recommended Congress step in with new legislation, “Congress must urgently consider the Keep Innovation in America Act, the bipartisan solution to fix the misguided reporting requirements from the IIJA and keep the digital asset ecosystem in the U.S.”
Do you think this enforcement of digital asset reporting will eventually go into effect? Share your thoughts and opinions about this subject in the comments section below.
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