Infrastructure bill’s crypto tax provisions to be signed into law. This could put pressure on Crypto
One provision would require each “broker,” which will mainly be exchanges, to report their cryptocurrency gains in a type of 1099 form. “Brokers” will also have to disclose the names and addresses of their customers.
Critics worry that as written, the provision’s definition of a “broker” is too broad. Cryptocurrency advocates are concerned that the current language could potentially target those without customers who wouldn’t have access to the information needed to comply. In response to these fears, the U.S. Treasury Department said in August that it will not target non-brokers, such as miners, hardware developers and others
Another provision expands a section of the U.S. tax code called 6050I to include digital assets.
Section 6050I requires that people who receive more than $10,000 in cash and equivalents file a report with the IRS. The report includes details about who paid them, including names and Social Security numbers. Any failure to report details about those sending payments is considered a felony offense.
The infrastructure bill provision would require similar from businesses and exchanges when they receive more than $10,000 in cryptocurrency.
While “it doesn’t have any direct burden on the end taxpayer,” Chandrasekera says, it will impact their privacy.
“Say you buy a Tesla with one bitcoin valued at $60,000. The car seller — the business — has to collect your personal information, like your name, address, Social Security number, etc., so they can report that to the IRS,” he says.
This surveillance rule has been called “unworkable and arguably unconstitutional” by cryptocurrency lobbyists like non-profit CoinCenter.
“Crypto people are privacy conscious. Why would they want to give all their information to these businesses? Some of these businesses may not even have a good way to protect that private information. That could lead to other second- and third-order consequences,” Chandrasekera say
Provisions will not take effect until January 2024