Crypto reporting to fund bipartisan infrastructure bill

| 7/30/2021
Crypto reporting to fund bipartisan infrastructure bill

Editor’s note, Aug. 12, 2021: On Aug. 10, 2021, the Senate voted to approve this infrastructure bill. It now moves to the House for a vote.

The Senate is set to consider the bipartisan infrastructure bill proposing more than $500 billion in spending that will focus on public transit, bridges, clean drinking water, and high-speed internet to grow the economy and create an estimated 2 million jobs per year over the course of a decade.

According to a fact sheet released by the White House on July 28, 2021, one of the sources for funding the bill is reporting for cryptocurrency and digital assets.

Some of the provisions being considered include:

  • Expansion of current broker reporting rules that could apply to a broad array of services and service providers that facilitate cryptocurrency transactions or services, as well as to decentralized and peer-to-peer networks
  • Expansion of basis reporting to cover a broadly defined group of digital assets
  • Inclusion of broad regulatory authority to the IRS
  • Expansion of current reporting requirements for recipients of more than $10,000 in cash to include recipients of digital assets
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Compliance will be challenging for a variety of reasons, including the general lack of existing guidance related to cryptocurrency and digital assets. In the case of information reporting, defining those responsible for reporting, triggers for reporting, and what is reportable is key. However, to date, there is no uniform taxonomy or set of definitions that applies to all taxpayers, transactions, or circumstances in the cryptocurrency and digital asset space.

If enacted, the effective date of these rules will be an important factor in a required filer’s ability to comply. Generally, significant lead time is necessary to implement new information reporting requirements. With the added novelty of reporting for cryptocurrency and digital assets, those subject to filing would likely need more than 18 months to two years to put necessary processes and procedures in place to comply. Ultimately, however, the time that filers would need to implement reporting will be determined by how quickly the IRS comes out with guidance and how complex that guidance is for filers to understand and apply.

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Rochelle Hodes
Rochelle Hodes
Principal, Washington National Tax
Trudie Kanter
Trudie Kanter
Managing Director
Tiffany Richardson
Tiffany Richardson
Partner