IRS Announces IRC Sec. 6050I Requirements for Digital Assets Will Not be Effective Until Regulations Are Issued

Treasury and the IRS have announced that the requirement to report transactions using digital assets the same as cash when they have a fair market value over $10,000 will not be in effect until regulations are released.

IRC Sec. 6050I Requirements

Under IRC Sec. 6050I, any person who is engaged in a trade or business and who receives more than $10,000 in cash in one transaction (or two or more related transactions) must report that transaction to the IRS and FinCEN within 15 days. The Infrastructure Investment and Jobs Act (“IIJA”) amended IRC Sec. 6050I to include “digital assets” in its definition of cash. The legislative language explicitly provided that this provision would be effective for information returns due after December 31, 2023.

Delay of Implementation

Treasury and the IRS announced on January 16, 2024, that the provision will not be effective until they publish regulations. The regulations are expected to provide forms and other guidance specifically addressing how to report the receipt of digital assets. The announcement advised that these regulations are forthcoming but did not give an expected timeline.

Prior to the announcement, there was significant confusion about when and how to report these transactions. In the absence of a formal announcement, taxpayers may have understandably believed they had a reporting requirement for transactions that occurred prior to this announcement.

Taxpayers who have questions about this filing requirement should reach out to a trusted tax advisor.