Internal Revenue Code Section 6050I generally imposes reporting requirements upon any person who is engaged in a trade or business and, in the course of such trade or business, receives more than $10,000 in cash in one transaction or two or more related transactions. These transactions are reported on IRS Form 8300, which collects identifying information about the transferor and the transferee and a description of the transaction.
Under the Infrastructure bill recently passed by the Senate and pending before the House, the definition of “cash” for reporting purposes would be expanded to include “any digital asset,” such that large transactions in tokens—including cryptocurrency—would require reporting even outside the brokerage context. Buying a beach house or a Lambo with your crytpo horde? Now your realtor or car dealer would be obligated to report the transaction as if you had paid with a suitcase filled with cash.
This requirement corresponds with the requirement that financial institutions report certain transactions that exceed $10,000 in cash under the Bank Secrecy Act. The purpose is to help the IRS detect under reporting of income, especially in cases where that income is from an undisclosed illicit source (AKA “money laundering”). While most crypto traders won’t be burdened by the new rules, it may hinder the adoption of cryptocurrency as an alternative means of payment in future years.
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