In a recent announcement, the Treasury Department and Internal Revenue Service informed businesses that they do not have to report the receipt of digital assets the same way they report the receipt of cash – until Treasury and IRS issue necessary regulations. This is good news for many businesses that engage in digital asset transactions. However, it's important to understand the new rules and how they affect reporting requirements.
The Infrastructure Investment and Jobs Act changed the rules that require taxpayers engaged in a trade or business to report cash received over $10,000. Digital assets are now included in this rule and treated as cash. However, Announcement 2024-4 announces that businesses do not have to comply with this rule until regulations are issued. This transitional guidance provides businesses with some breathing room before they have to comply with the new rule.
For businesses that received cash before the Infrastructure Investment and Jobs Act, the old reporting rules still apply. Cash transactions received in the course of a trade or business should be reported on Form 8300, Report of Cash Payments over $10,000 Received in a Trade or Business. This form must be filed 15 days after cash is received. Digital assets, on the other hand, do not have the same reporting requirement – at least, not yet.
The announcement from Treasury and IRS indicates that they plan to issue proposed regulations that provide additional information and procedures for reporting the receipt of digital assets. These regulations will be open for public comment, giving businesses and other interested parties the opportunity to voice their opinions on the proposed changes.
It's important to note that this announcement only affects the way businesses report the receipt of digital assets. It does not change the tax treatment of digital assets in any other way. Businesses should still consult with their tax advisors to ensure they are accurately recording income from digital asset transactions and complying with all tax regulations.
The Treasury Department and IRS announcement provides some relief for businesses engaging in digital asset transactions, as they do not have to report them the same way they report cash – at least, not yet. However, businesses should stay informed as regulations are issued and comply with all tax regulations related to digital assets. As always, consulting with a tax advisor is the best way to stay ahead of any tax changes that may affect your business.