New Cryptocurrency Tax Reporting Requirements Effective after December 31, 2023

The recently passed Infrastructure Act includes two amendments to the Internal Revenue Code that will make it easier for the IRS to identify and attribute cryptocurrency transactions to taxpayers. 

First, the definition of a broker that is required to file information returns is expanded now to include persons that regularly provide transfers of digital assets on behalf of another person.  The information return, like any brokerage statement, must contain the name and address of each customer with information on the customer’s adjusted basis in such security and whether the gain or loss is short term or long term.

The second amendment expands the requirement for persons engaged in a trade or business to report receipts of more than $10,000 of any digital asset.  The Currency Transaction Report (CTR) must contain the identity, amount received and the nature of the transaction.  The information reported on CTRs is used in tax enforcement and tax litigation cases.