The Internal Revenue Service (“IRS”) issued an announcement that it is delaying implementation of reporting obligations for businesses that accept large amounts of digital assets. This SKrypto Blog Post summarizes cash and digital asset reporting obligations by businesses.
Generally, a U.S. person that is engaged in a trade or business is required to file a report when it receives more than $10,000 in “cash” (a term of art under the IRS regulations) in either a single transaction or a series of related transactions. In addition to U.S. or foreign minted cash and coins, “cash” is currently defined to include traveler’s checks, cashier’s checks, money orders and bank drafts where the face value of these instruments is less than $10,000.
Business taxpayers must report transactions on Form 8300 within 15 days of the transactions. Form 8300 is filed electronically with the Financial Crimes Enforcement Network (“FinCEN”) or on paper with the IRS. There is a corresponding obligation provide annual statements to each person whose name is listed on a Form 8300.
In 2021, Congress amended the U.S. federal income tax law to add digital assets to the list of property treated as cash for this purpose, effective as of December 31, 2023. Treasury regulations have not yet been published, nor has Form 8300 been updated to include digital assets. The IRS announced that until regulations are published, business taxpayers will not be required to include digital asset transactions on Form 8300.
Businesses that accept crypto as a form of payment will eventually have to file Form 8300 for any transactions in excess of the $10,000 threshold. While most businesses do not accept cash, it is possible that they would accept crypto (such as this firm, for instance). Once the IRS does issue the applicable regulations, businesses will need to file Form 8300 with FinCEN or the IRS with respect to invoices that are settled in crypto in amounts of $10,000 or more.
Businesses should be aware of this future reporting obligation, among other potential tax and non-tax obligations, when deciding to accept crypto as payment by customers.