The second installment in working through the new infrastructure bill. Kudos to you if you got the Hot Shots reference.
The bill expands a section of the U.S. tax code called 6050I to include digital assets. Now, there was a whole lot of noise about the government wanting to know about anything you do that has more than a 600 dollar impact. They made some adjustments to that provision after a public outcry, but, in essence still left the idea that pretty much anything you do with a minimum financial impact is now the in the IRS's wheelhouse. I have written on this before, so I will just start with where it stands now.
Section 6050I requires that people who receive more than $10,000 in cash and equivalents file a report with the IRS. The report includes details about who paid them, including names and Social Security numbers. Any failure to report details about those sending payments is considered a felony offense. The infrastructure bill provision would require similar from businesses and exchanges when they receive more than $10,000 in cryptocurrency.
Now, as I have stated in other writings, you owe the taxes you owe. It doesn't matter if you make a 50 dollar deal or a 500,000 deal. What this does do is impact the privacy of the American taxpayer, which flies in the face of the crypto mentality.
“Say you buy a Tesla with one bitcoin valued at $60,000. The car seller — the business — has to collect your personal information, like your name, address, Social Security number, etc., so they can report that to the IRS,” says Shehan Chandrasekera, a CPA at CoinTracker
This surveillance rule has been called “unworkable and arguably unconstitutional” by cryptocurrency lobbyists like non-profit CoinCenter.
“Crypto people are privacy conscious. Why would they want to give all their information to these businesses? Some of these businesses may not even have a good way to protect that private information. That could lead to other second- and third-order consequences,” Chandrasekera says.
