Robert W. Wood, of Wood LLP, has made available for download his article, “Crypto IRS Reporting Rules Promise Tax Compliance—And Enforcement,” published in Forbes Magazine. The abstract is as follows:
The Infrastructure Investment and Jobs Act (H.R. 3684) put crypto in the crosshairs in a comprehensive way. The crypto community was outraged when the measures were first proposed, and pushed back hard. Those efforts resulted in some narrowing, but the provisions were enacted anyway. Some people are still talking about a repeal effort, but that could prove to be a hard sell when staggering tax dollars are on the line that the Biden administration may need. Indeed, Congress and the IRS hope to scoop up enormous tax dollars with the new crypto reporting regimes that are projected to rake in an astounding $28 billion over the next ten years. No other provision in the massive federal law is supposed to produce tax dollars even close. It means that tax reporting and enforcement for crypto is ramping up. It isn’t only individual taxpayers that should be paying attention to their tax returns, including amending past returns as needed. The stakes for crypto exchanges, funds and other businesses that handle crypto are arguably even bigger, with a widening tax net for what it means to be “in business” in this context.
There are two new sets of rules slated to take effect on December 31, 2023. One set is about broker reporting on Form 1099-B, and the other involves a new cash-like reporting form that has potentially staggering criminal liability. Of course the IRS says crypto is not currency. In 2014, the IRS announced that it would treat crypto as property, not as money. The reverberations of that rule to your taxes are huge.
Posted by Bennett Mansour, Associate Editor, Wealth Strategies Journal.