President Joe Biden has signed into law a $1.2 trillion bipartisan infrastructure bill that will direct cryptocurrency exchanges to notify the Internal Revenue Service of crypto transactions through the 1099-B form, NextAdvisor reported Monday.
Crypto investors should bear in mind two things as they comply with the new law: keeping track of what they paid for the cryptocurrency or cost basis and finding a tax professional who is knowledgeable about the digital currency and could help report their crypto investments to the IRS.
CNBC Make It reported that the new law will also apply to other digital assets like NFTs or nonfungible tokens and will direct brokers and businesses to file a report with the IRS if they receive more than $10,000 in cryptocurrency.
Cryptocurrency lobbyists want the U.S. government to further clarify the definition of “broker” in the law and argue that the reporting provision for transactions over $10,000 is “unconstitutional,” citing privacy concerns.
The lobbyists also plan to call for standalone bills and amendments to the measure’s tax reporting provisions, which will not take effect until January 2024.
“It’s up to the Treasury Department to decide who is subject to the provisions,” said Ivory Johnson, founder of Delancey Wealth Management and a certified financial planner. “Similar to the ‘broker’ definition, the Treasury Department will have to provide guidance.
The Potomac Officers Club will hold its Digital Currency and National Security Forum on Jan. 27. Sign up for the virtual event to hear from government and industry leaders as they talk about the implications, risks, opportunities and challenges that digital currencies pose to the future of the U.S. economy and national security.