New IRS Rule Mandates Business Report Crypto Transfers Worth $10K+ – The Defiant
Businesses that fail to report receiving sums of at least $10,000 in crypto could face felony charges
A sweeping new tax reporting rule targeting U.S. businesses took effect on Jan. 1, comprising the U.S. Treasury Department’s latest bid to clamp down on the crypto industry.
The new rule, 6050I, requires any business receiving more than $10,000 in crypto to report the transaction within 15 days to the Internal Revenue Service (IRS) under threat of facing a felony charge.
Alongside reporting the transaction, recipients of five-figure digital asset transfers must also disclose the names, addresses, and social security numbers of transactional counterparties. The new reporting rules exclusively apply to businesses handling crypto assets and do not impact individuals.
Crypto commentators have raised concerns over how to report the block rewards received for validating a blockchain network.
Jerry Brito, executive director for Coincenter, a U.S.-based crypto advocacy think tank, also questioned how to report crypto received from large trades executed via decentralized exchanges.
“This is the 6050I law that Coin Center challenged in federal court and our case is in appeals,” Brito tweeted. “Unfortunately for the time being there is an obligation to comply – but it’s unclear how one can comply… What if you receive funds from a block reward or a DEX transaction? Who do you report as the sender?”
Shehan Chandrasekera, the head of tax at Cointracker, a crypto tax software provider, highlighted that the new rule could impact the operations of validators operating staking pools within the U.S.
U.S. regulators take aim at web3
The U.S. Treasury Department, of which the IRS comprises a major bureau, is increasing its efforts to clamp down on the crypto sector.
On Nov. 29, the Office of Foreign Assets Control (OFAC) sanctioned a crypto mixer dubbed Sinbad after alleging North Korean state-sponsored criminal organization Lazarus Group had used it to process millions of dollars in stolen funds.
The move followed the OFAC adding decentralized code to its list of Specially Designated Nations for the first time in August 2022 when it sanctioned the Tornado Cash crypto mixing protocol.
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Sanctions targeting crypto mixers are intended to clamp down on North Korea’s ability to launder stolen digital assets via the controversial protocols.
Senator Elizabeth Warren is also leading an offensive against crypto in the U.S. Congress, recently advancing a bill intended to mandate stringent KYC requirements on web3 users. Warren claimed cryptocurrencies comprise an essential component of Hamas’s operational activities. However, reports from on-chain analytics firms such as Elliptic have found there is “no evidence” that Hamas is receiving a significant volume of crypto donations.
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