On January 16, 2024, the IRS and US Department (Treasury) issued transitional guidance delaying the requirement to report digital asset receipts in excess of $10,000, as mandated under the Infrastructure Investment and Jobs Act of 2021 (IIJA). Reporting of digital asset receipts under IIJA will not begin until the IRS and Treasury publish regulations to implement the relevant section of the IIJA.

On November 15, 2021, President Biden signed the IIJA into law. Section 80603(b)(3) of IIJA amended Section 6050I of the Internal Revenue Code (Code) to add digital assets to the list of assets included in the definition of cash under Section 6050I(d) of the Code for returns required to be filed, and statements required to be furnished, after December 31, 2023. Under Code Section 6050I(a), any person engaged in a trade or business who, in the course of that trade or business, receives cash in excess of $10,000 in one transaction (or two or more related transactions) must:

According to the transitional guidance, until the IRS and Treasury publish regulations under Code Section 6050I to implement IIJA Section 80603(b)(3), persons engaged in a trade or business who, in the course of that trade or business, receive digital assets or digital assets and other cash in one transaction (or two or more related transactions) will not be required to include those digital assets when determining whether cash received has a value in excess of the $10,000 reporting threshold for purposes of determining if reporting is required under Code Section 6050I with respect to those transactions. The transitional guidance clarifies that persons engaged in a trade or business who, in the course of that trade or business, receive cash (other than digital assets) in excess of $10,000 in one transaction (or two or more related transactions) must continue to file an information return under Code Section 6050I with respect to that cash received.

According to the transitional guidance, the IRS and Treasury intend to:

On August 29, 2023, the IRS and Treasury published a notice of proposed rulemaking (NPRM) that includes proposed rules clarifying the definition of the term digital assets as applicable to the IIJA and Code (see Legal Update, IRS Releases Proposed Regulations on Broker Reporting for Sales and Exchanges of Digital Assets). These proposed rules have not yet been finalized.

The transitional guidance notes that it does not affect the income tax obligations of persons engaged in a trade or business who receive digital assets and persons who use digital assets to make any payments in the types of transactions described in the transitional guidance.