IRS Hits Brakes on $10K Crypto Reporting Rule

The Internal Revenue Service (IRS) has given US businesses a breath of fresh air, announcing they don’t have to report transactions with crypto worth over $10,000 until final guidelines on the matter are issued.

The unexpected announcement postponed the controversial requirement that took effect less than a month ago. The IRS did not clarify why it has decided to postpone the rule.

Tax evasion concerns

The IRS is concerned that entities operating as a trade or a business could be avoiding taxes on their crypto operations. Businesses have always been required to report cash transactions exceeding $10,000 within about two weeks of receiving the money. Bitcoin and altcoins were to be placed within the same scope under the new law, which went into force on Jan. 1 this year.

In particular, the new rule affects crypto traders, small businesses, and NPOs that receive donations in digital currencies.

Separate law for payment platforms

The suspension has no effect on another law involving digital transactions. Under that one, payment processors such as PayPal, Zelle, and Venmo and e-commerce providers like Etsy must mandate customers who get payments of $5,000 or more to fill out tax forms. This applies to all forms of payments, including in crypto, for goods or services sold per annum starting this year.

Sellers on eBay will need to report customer transactions when they file returns in 2025.

The backlash

The new reporting rule has made some wonder how the IRS will differentiate between investments and business payments in crypto. The issue involving dynamically changing values of crypto is also awaiting clarification.

Cryptocurrency supporters and advocacy groups expressed opposition to the rule. CoinCenter executive director Jerry Brito wrote in a blog post that the law was “virtually impossible to comply with” considering that the IRS has not provided sufficient guidance.