Did you know that not properly reporting crypto-related transactions could result in a felony? Well, here’s a little more information to keep you out of jail and tax compliant.

The infrastructure bill was passed a little while ago, mandating that brokers report digital transactions in excess of $10,000 to the IRS. Right now, there’s some pushback as platforms like Coin base strive to define who qualifies as a broker. The less talked about result of the infrastructure bill is the obligation to report sales over $10,000 when dealing with digital assets (NFTs, Crypto and etc.).

Failures to fulfill §6050I reporting obligations can be charged as a felony! Not sure about you but I was not meant for that lifestyle. The sort of good news is that the recipient of the cash is not required to file the report if the transfer involves a financial institution that would also be obligated to report the transfer under the Bank Secrecy Act. This means that businesses are encouraged to use regulated financial institutions for this type of transaction. This limits the possible criminal exposure. Most cryptocurrencies transactions don’t involve these regulated financial institutions (which has kind of been the point right? Power to the people!! lol) Since most large transactions can occur on a decentralized platform, this puts more responsibility on those involved in the blockchain world.

Now you’re probably asking, “Um ok so what exactly am I supposed to do to properly report?”. Now, it can be tricky to give a one size fits all answer to everyone involved in this space. So, the best advice I can give is to speak with your accountant and bring this extra reporting obligation up. If they’re still somewhat scratching their heads, be patient, and bring up form 8300 Report of Cash Payments Over $10,000 Received in a Trade or Business.

Stay safe and legal guys! Until next time.