New Digital Asset Information Reporting
The Infrastructure Bill (IIJA) was signed into law by the President on November 15, 2021. Although this Bill is not primarily a tax bill, there are some tax provisions included. One of the most discussed tax provisions is the new information reporting requirements for Digital Assets. This provision will take effect in 2024 for the filing of 2023 tax returns.
Under these new provisions, Digital Assets will be considered cash; therefore, any person (or entity) transacting digital assets on behalf of another person (or entity) will be subject to reporting transactions over $10,000. All digital asset transactions, not just buying and selling digital assets, will be subject to the reporting. Transactions include but are not limited to transfer transactions between exchanges, using digital assets to purchase items, or receiving digital assets for performing services or selling items.
At this time, there have not yet been any official guidelines released from the IRS, but we wanted to make you aware the new reporting is coming for the tax year 2023. For more details, please see our attached client letter regarding Digital Asset reporting.
As a reminder, if you have had transactions in digital assets during 2021, we will need the information from your digital asset platforms converted to a tax reporting format. Most digital asset platforms can export the transactions to a digital asset tax reporting platform needed to prepare your taxes. See our prior blog post from August 31, 2021.