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Home»ETHEREUM NEWS»Would you rather report cryptocurrency transactions over $10,000 to the IRS or go to jail? complicated
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Would you rather report cryptocurrency transactions over $10,000 to the IRS or go to jail? complicated

By Crypto FlexsJanuary 6, 20246 Mins Read
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Would you rather report cryptocurrency transactions over ,000 to the IRS or go to jail?  complicated
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The opening day of 2024 brought with it a cry that echoed far and wide for cryptocurrencies. The IRS is coming! The IRS is coming!

The hullabaloo was sparked by a circulated segment of the 2021 federal government. infrastructure law Accordingly, starting January 1, 2024, key details related to certain cryptocurrency payments over $10,000 (including the payer’s name, address, and Social Security number) must be reported to the IRS under a felony penalty.

Worries soon spread among cryptocurrency users, unsure whether they could suddenly risk being thrown in jail for failing to report large on-chain transactions.

great. I pay taxes. It hurts and it’s very difficult, but I do it.

This won’t allow me. We don’t know the names, let alone the SSNs, of the people who buy our work. 15 days or a felony? By selling my art?

Are you serious about leaving America for the sake of life, liberty, and the pursuit of happiness? https://t.co/1G1Szsw9au

— Claire Silver 🌸 (@ClaireSilver12) January 3, 2024

But tax and policy experts advise calm. They said the law would not apply to the majority of cryptocurrency investors and NFT flippers. Moreover, they emphasize that the statute: ~ no It is currently being implemented, but it may take months, perhaps even years, before it is actually implemented.

“There are open questions here that will have to be addressed,” said Jason Schwartz, a tax partner and cryptocurrency expert at law firm Fried Frank. decryption. “But I don’t think people should really be wringing their hands, because the IRS is of the view that none of this applies yet.”

This is a reference to a statement from the Internal Revenue Service (IRS) amid ongoing litigation with cryptocurrency advocacy group Coin Center over the requirement, saying it does not plan to enforce the law pending lengthy public comment and review.

So what exactly does the law require, and to whom does it apply?

The statute stipulates that anyone who receives at least $10,000 worth of cryptocurrency in the course of a “trade or business” must report identifying information about who paid the money. The same laws have been in place for cash transactions for a long time.

In cryptocurrency, who the law can affect all comes down to what constitutes a financial transaction made in a “trade or business.” This is a tax law term that is known through decades of legal precedent but cannot be literally defined.

“I think it’s very clear that it applies to almost any transaction where someone receives more than $10,000 in cryptocurrency assets in exchange for goods or services,” said Miller Whitehouse-Levine, CEO of cryptocurrency lobbying group DeFi Education Fund. , said decryption.

But what does it actually mean? Any artist selling a $12,000 NFT would probably be subject to this rule, Whitehouse-Levine says. If you’re an NFT collector reselling the same NFT for $20,000, probably not.

What about cryptocurrency trading? Whitehouse-Levine isn’t sure. revenue Website It defines a trade or business as “an activity carried on in good faith for the purpose of making a profit.” It’s a lot like flipping a meme coin.

But Jason Schwartz disagrees. He argues that the IRS tends to classify only professional, full-time cryptocurrency market participants as traders. This means that the majority of cryptocurrency users are exempt from reporting obligations.

“I would be very surprised if these reporting requirements applied to typical cryptocurrency users or so-called DeFi degen,” he said. decryption. “They’re not doing this full-time.”

That doesn’t mean cryptocurrencies are obvious. Schwartz said that once this law is adopted and implemented, individuals receiving payments from the DAO (what Social Security number do they provide to the payer?), cryptocurrency stakers (whether they are running a node as a business, and how they list their Ethereum home address) Do you?), cryptocurrency exchanges like Binance and Kraken may also be required to document all transfers to their platforms exceeding $10,000, lawyers say.

However, he is hopeful that these issues will be addressed and resolved. He and other experts say it will be a long time before the IRS enforces the law.

Is this law actually valid or not valid?

The revised IRS rule in question (the same one floating around Twitter) lists an effective date of January 1, 2024. However, recent legal developments suggest it may be months or even years before the IRS actually enforces the law.

This disconnect stems from the fact that cryptocurrency lobbying group Coin Center, which claims the new cryptocurrency tax law is unconstitutional, is currently suing the IRS to strike it down. And last month, Justice Department lawyers representing the IRS in a federal appeals court attempted to have the lawsuit dismissed by declaring that the law would not automatically take effect this year and, in fact, would not be implemented until lengthy public comment. And the review is complete.

This process could take years, according to Whitehouse-Levine of the DeFi Education Fund. Similar Proposed IRS Rule Information about cryptocurrency was first announced in January 2022. After two years and three rounds of public comment, it has not yet become official IRS policy.

“Assuming the Justice Department and Treasury Department aren’t lying to the Federal Circuit for who knows how long it’s going to take,” Whitehouse-Levine said. “They haven’t even started the proposed rulemaking process.”

decryption We requested comment from the IRS and the Department of Justice, but did not receive a response.

6050I Implementation REDUX

I agree @jerrybrito and @Coin Center It’s…strange for DOJ/IRS to claim that section 6050I is not self-executing for cryptocurrencies without registration.

6050I(a) requires reporting of certain cash payments “at such times as the Secretary may determine by regulation.”… https://t.co/w4pZOQCZM4

— CryptoTaxGuy.ETH ⌐◨-◨ 🦇🔊🛡️ (@CryptoTaxGuyETH) January 5, 2024

Coin Center Upholds Law This Week is It is already in effect, blog post The Justice Department disagrees with that reading.

New cryptocurrency tax reporting requirements went into effect on January 1.

If you receive more than $10,000 in cryptocurrency, you are now required to report the transaction (including name, address, SS number, etc.) to the IRS within 15 days if you are threatened with felony charges. pic.twitter.com/wyRsfJEpMo

— Jerry Brito (@jerrybrito) January 2, 2024

But Jerry Brito, executive director of Coin Center, said fixating on whether the law is currently technically in effect is missing the point.

“It doesn’t make sense to ask whether the law is substantively effective,” Brito said. decryption. “If the speed limit is 55 and you’re sure there are no police around so you go 80, is the law really there?”

He believes the threat from the IRS’s new tax law is here and now, regardless of whether the federal agency says it’s enforcing the law today or a year from now.

“The law is there and you are breaking it,” he continued. “Even though I’m pretty sure you won’t get caught.”

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