The IRS recently released Announcement 2024-4, stating that the receipt of digital asset transactions in excess of $10,000 does not have to be reported on Form 8300 until final regulations are published.
Background
Under current law, Internal Revenue Code Section 6050I requires any person engaging in a trade or business that receives more than $10,000 in cash (in one transaction or two or more related transactions) to file a Form 8300, “Report of Cash Payments Over $10,000 Received in a Trade or Business” within 15 days of receipt.
The Infrastructure Investment and Jobs Act (Infrastructure Bill), signed into law by President Biden on November 15, 2021, increases reporting requirements related to cryptocurrency and related digital assets. This new bill broadened the buckets of transactions to report under IRC §6050I also to include digital assets.
There is a January 1, 2024 effective date for digital asset transactions to be reported on Form 8300 written into the Infrastructure Bill. There was much confusion over this effective date because the IRS has not issued any guidance on how to comply with this new law, nor have they provided an updated Form 8300 that accounts for some of the nuances specific to digital assets. It came as a relief when the Treasury Department and IRS announced on January 16, 2024, that taxpayers are not required to report certain transactions involving digital assets until final regulations are published. Exactly when those final regulations will be published is still unknown.
When to File
Once the rule is effective, any taxpayer engaged in a trade or business that receives a digital assets transaction valued at more than $10,000 will be required to report the transaction on Form 8300. The Form 8300 is generally required to be reported within 15 days of receipt.
Aggregation rules are also at play. Once you receive more than $10,000, reporting on Form 8300 is required. If you receive greater than $10,000 in digital assets that require reporting, and a taxpayer later makes additional payments (but still within the 15-day period), you can aggregate and report all payments on the one Form 8300. For recurring payments from the same taxpayer, all payments made within a one-year period should be added, and when the total cash payments exceed $10,000, reporting is required within 15 days. Once you file a Form 8300 for a specific taxpayer, a new cumulative total of digital asset receipts begins, and when the subsequent digital asset receipts exceed $10,000 within a one-year period, reporting is again required.
How to Prepare
While the digital asset transactions may not be subject to Form 8300 reporting right now, taxpayers can expect the IRS to publish final regulations in the near future. Now may be the time to prepare your processes and systems so they are already in place when this new rule becomes effective.
If filing a Form 8300, you will typically want to collect the payer’s name, address, taxpayer identification number, and transaction details to the IRS. Working with a digital asset subledger that incorporates the ability to flag transactions above $10,000 could be helpful. You may also need a know-your-customer (KYC) or similar process in place to collect the necessary information.
As of January 1, 2024, electronically filing Form 8300 is generally required, with limited exceptions, and can be submitted on the IRS website. However, in order to be able to file electronically, your business must have an account set up with the Financial Crimes Enforcement Network’s BSA E-Filing System.
Failure to file Form 8300 could result in civil consequences and felony charges.
How FORVIS Can Help
Having the right team behind you can help ease your mind. When the final regulations are published, FORVIS has the resources to stay up to date on this evolving issue. We are ready to help. If you have any questions or need assistance, please reach out to a professional at FORVIS.
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