Treasury Department Temporarily Eases Reporting Requirements for Digital Assets

Internal Revenue Service (IRS)

WASHINGTON, D.C. — In a move that could provide temporary relief to businesses dealing with digital assets, the Treasury Department and Internal Revenue Service (IRS) have announced that these entities will not be required to report the receipt of digital assets in the same manner as cash transactions. This remains in effect until the Treasury and the IRS issue new regulations.

The Infrastructure Investment and Jobs Act recently revised the rules that deemed digital assets as cash, requiring taxpayers engaged in a trade or business to report any receipt of cash or its equivalent exceeding $10,000. However, Announcement 2024-4 provides transitional guidance, stating that the new provisions will not take effect until the Treasury and IRS issue further regulations.

The change is significant for businesses operating within the rapidly evolving digital asset space, including cryptocurrencies. The IRS had previously considered digital assets as property for tax purposes, and this shift towards treating them as cash could have major implications on how businesses report their transactions.

However, it’s important to note that this announcement does not affect the rules for cash received in a trade or business before the Infrastructure Investment and Jobs Act. Businesses must still report cash payments over $10,000 received in a trade or business on Form 8300 within 15 days of receipt.

Going forward, the Treasury and the IRS plan to issue proposed regulations that provide additional information and procedures for reporting the receipt of digital assets. This will also offer the public an opportunity to comment in writing and, if requested, at a public hearing.

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This transitional guidance offers businesses a brief respite from the potential administrative burden of reporting digital asset transactions as they would cash transactions. However, businesses should prepare for future changes, as the Treasury and IRS work on developing the new regulations. The evolution of these rules reflects the growing prominence of digital assets in commerce and the need for regulatory frameworks to adapt accordingly.

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