IRS Hits The Breaks On Controversial Cryptocurrency Tax Rule
The controversial $10,000 cryptocurrency tax rule enforced by the Internal Revenue Service (IRS) is reportedly undergoing a pause. In a joint statement issued by the IRS and the Treasury Department, a shift in their position regarding the tax rule was indeed communicated.
Calm Before The Storm
The aforementioned rule, which mandates Americans to report cryptocurrency transactions exceeding $10K, will not be actively enforced for the time being. Businesses are not obligated to report the receipt of digital assets in the same manner as cash until specific regulations are issued by the Treasury and IRS.
This confirmation aligns with various speculations made by industry experts, indicating a delay in the enforcement of the rule pending a comprehensive review and a public comment period. The language of the rule has also raised questions about its target demographic, as it necessitates reporting for anyone receiving over $10,000 in crypto within a trade or business, mirroring the standard practice for cash transactions.
Navigating The Challenges
The significance of this development lies in the complexity of applying such a rule to cryptocurrency transactions, given their highly decentralized nature. Individuals receiving payments via decentralized autonomous organizations (DAOs) or through staking may encounter challenges in identifying a single payer.
Notably, back in 2020, the crypto advocacy group Coin Center initiated a lawsuit against the Treasury Department and the IRS, asserting the unconstitutionality of the new law, a case that is still under appeal as of this time.
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