The Internal Revenue Service (IRS) has instituted a new regulation mandating individuals receiving a minimum of $10,000 in cryptocurrencies to report transaction details to the IRS.

The required information encompasses the sender's name, address, and Social Security number (SSN), along with transaction specifics such as the amount, date, and nature.

New Tax Reporting Obligations

Effective January 1, 2024, these tax reporting obligations emerged as part of the infrastructure bill signed into law by United States President Joe Biden in November 2021.

Failure to submit a report within 15 days of a transaction may result in felony charges, as the rule is self-executing, immediately operational, and enforceable without additional measures.

Resistance

Crypto advocacy group CoinCenter has contested the new regulation, contending that compliance with the ostensibly straightforward but unconstitutional obligation might pose challenges for many.

CoinCenter specifically highlights concerns for blockchain miners and validators, as well as individuals engaging in crypto-for-crypto swaps through decentralised exchanges.

In such cases, there is no identifiable sender to include in the mandatory report.

Moreover, CoinCenter criticizes the lack of clarity in determining the value of specific cryptocurrencies.

The group also raises issues related to receiving donations from anonymous contributors, citing difficulties in reporting sender information.

CoinCenter initiated legal action against the U.S. Treasury in June 2022, challenging the constitutionality of the rules. The lawsuit is currently under consideration in court.