- The IRS is revising the stringent crypto tax rule it enforced on January 1.
- The tax authority shared that it needs to issue new regulations.
- For now, the IRS doesn’t require businesses to report digital assets in the same way as cash.
The crypto industry’s rapid ascent into prominence, driven by a burgeoning user base and the rising hype surrounding the Bitcoin ETF, is enticing the US Treasury Department and Internal Revenue Service (IRS) to claim their share in tax.
In an attempt for its slice of the pie, the tax authority recently enforced new digital asset reporting rules, stirring quite the mix of frustration and confusion within the crypto industry, mainly concerns that the new laws could send them to jail for not reporting their crypto transactions.
However, in a surprising twist, the IRS has swiftly pivoted to a more relaxed stance towards crypto, leaving everyone pleasantly surprised.
The IRS Revises Stringent Crypto Tax Rule, For Now.
The US Treasury Department and IRS on Tuesday, January 16, made a surprising announcement, declaring that businesses weren’t required to report digital assets in the same way they did cash– not yet, at least.
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The IRS’ decision follows a revision of the Infrastructure Investment and Jobs Act, which came into force on January 1, mandating businesses to report crypto transactions worth over $10,000 as cash within 15 days of the transaction.
Addressing the change, the IRS stated, “This particular provision requires the Treasury and the IRS to issue regulations before it goes into effect.”
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The announcement confirmed what policy and tax experts, especially CoinCenter, had been asserting for months– the mandate could not be enforced until a lengthy period of public comment and review takes place.
Crypto lobbying group CoinCenter’s lawsuit against the IRS, pivotal in shaping this provision, contended that the rule would uncover a detailed picture of a person’s activities, including intimate and expressive activities far beyond the immediate scope of the mandate.
On the Flipside
- The US House Financial Services Committee supported the IRS’ provision, stressing several underlying problems with the digital asset reporting requirements passed on January 1.
- The IRS has yet to specify a deadline for when it seeks to publish new regulations for crypto reporting.
Why This Matters
The IRS’ announcement proves its openness to public feedback and a commitment to reevaluate its processes following taxpayer criticism. Simplifying tax compliance for businesses is important for the IRS, especially in the context of the burgeoning prominence of cryptocurrencies as a rapidly growing asset class.
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