Jerry Brito, the Executive Director of Coin Center, a non-profit organization dedicated to research, education, and advocacy in the cryptocurrency ecosystem, has expressed concerns over the difficulties crypto users may face in complying with a new IRS rule pertaining to reporting crypto transactions. In a post on Coin Center's website, Brito revealed that his organization had filed a lawsuit against this rule in 2022; however, the case remains unresolved.
"Unfortunately, the new year also brings a new law that is not only unconstitutional but also virtually impossible to comply with as a result of inaction from the IRS," Brito said in the post. "It is important that every crypto user is aware of the pitfalls that have been created as this law is now in effect."
According to Brito's blog post, this new reporting requirement was introduced as part of the Infrastructure Investment and Jobs Act. The act became law in November 2021, but the new reporting requirement was scheduled to take effect on Jan. 1. It amends the Tax Code to mandate any recipient of $10,000 or more in crypto to submit a report about the transaction to the IRS within 15 days. This report must include details about the sender such as their name, address, and Social Security number. Non-compliance could lead to felony charges.
Brito voiced concerns about individuals who receive large crypto transactions but lack information about the sender. He cited examples like blockchain miners receiving rewards or charities getting anonymous donations. "It’s no doubt only a matter of time before someone either buys a table sponsorship for our annual dinner or makes a contribution of $10,000 or more to Coin Center in cryptocurrency... Who could we possibly list as the sender in that case?" questioned Brito.
In his post, Brito also underscored ambiguity regarding how these transactions should be reported. He mentioned that while the new rule states that reports should be sent "in such form as the Secretary [of the Treasury] may prescribe," no specific form has been prescribed yet.
Brito revealed that Coin Center had challenged the constitutionality of this new law in a lawsuit filed against the Treasury Department in June 2022. The case, however, is still pending. "We’ll continue to fight this law in court and work to figure out how compliance can be possible in the meantime," Brito asserted.
Based in Washington, D.C., Brito has been serving as the Executive Director of Coin Center where he addresses public policy issues related to cryptocurrency. With over two decades of experience at the intersection of technology and public policy, Brito has testified before multiple Congressional committees about crypto and blockchain technology.
