How the Infrastructure Investment and Jobs Act Targets Crypto Taxation

A New Era of Crypto Taxation

With the Infrastructure Investment and Jobs Act (H.R. 3684) coming down like a ton of bricks on the crypto community, it’s hard not to feel like everyone’s favorite digital currency is now public enemy number one. Congress has set its sights on collecting a jaw-dropping $28 billion over the next decade. Think of it as the IRS gearing up for a treasure hunt – your crypto assets might as well be X marks the spot!

The Crypto Community’s Cry for Help

The first time this measure hit the books, crypto enthusiasts practically erupted into flames. There were protests, petitions, and probably some very intense Twitter threads. Still, the law passed! Now, the questions swirling are as perplexing as trying to explain Bitcoin to your grandma: Are you a broker? Who qualifies as one? And how do these borderline draconian reporting rules apply to you?

Defining a Broker: A New Taxing Muddle

According to the fresh-off-the-press definitions in the tax code, the term “broker” has expanded to include a whole slew of people engaged in digital asset transactions. Essentially, it means anyone who facilitates transferring digital assets on behalf of others will have to file reports. Yep, your friendly neighborhood crypto exchange is now making a list and checking it twice – and you better believe the IRS is watching!

Cash-Like Reporting Regulations

Here’s where it gets even spicier: think cash reporting but for crypto. Anyone receiving more than $10,000 in digital assets as part of business will now trigger a mandatory IRS Form 8300—seriously, don’t even think about trying to hide that cash! This is a classic case of trying to structure your withdrawals to evade reporting, a federal offense that could lead straight to the slammer. Just remember: the IRS does not take kindly to cash shenanigans.

Are You Ready for 2024?

Starting January 1, 2024, these new rules will be in full swing, and let’s face it, unless you want to find yourself on the IRS’s naughty list, you better start getting your recordkeeping in order. If receiving digital assets over the dreaded $10,000 benchmark, expect to fill out all sorts of identifying information about the sender, much like filling out a friend’s awkward, elaborate resume before a big date.

The Bottom Line: Get Your House in Order

Whether you identify as an investor or a trader, the stakes couldn’t be higher. This isn’t just about avoiding a complicated tax situation; it’s about avoiding potential jail time. Take it from those novelty shirts: only you can prevent IRS fires! Don’t wait for donning the orange jumpsuit to finally figure out your tax reporting obligations. The IRS is already in the room, with a clipboard, waiting.