You’re probably aware that the IRS requires reporting on Form 8300 if someone engaged in a trade or business receives $10,000 or more in cash for a transaction or series of transactions (Internal Revenue Code, Sec. 60501). The purpose of such requirement is to prevent money laundering and tax evasion. The reporting is required within 15 days of receipt of the cash.
Beginning January 1, 2024, this reporting requirement now extends to cryptocurrency as well. The 8300 report must include the payor’s name, address, tax ID number, date of birth and occupation, and the payee must verify the payor’s name and address.
Penalties for failure to file a Form 8300 are the greater of $500 per failure, $25,000 or the amount of the transaction (capped at $100,000). Additionally, failure to file is a felony.
Note that the Form 8300 reporting requirement only applies if the currency is received from U.S. persons or entities. Therefore, if the transaction involves foreign parties, this requirement does not apply.
Some challenges have been filed against aspects of the new rule, since there are transactions with cryptocurrencies where the payor is not identifiable, like blockchain miners and validators that receive block rewards, or where crypto swaps occur through decentralized exchanges.
The official regulations have not been released and there are various ambiguities regarding the requirements. In the mean time, it is important to maintain good records for all crypto transactions.