Cryptocurrency Transactions, Reporting Guidelines, and Compliance Measures for Businesses

If you receive cryptocurrency as a payment, you need to know about the new filing requirement.  In general, any business that receives cash (either US dollars or any foreign currency), coins, and as of January 1st, 2024 cryptocurrency as a payment for services or goods, must report such payments on Form 8300 if the payments exceed $10,000 per transaction within 12 months. Note that “transaction” in this case does not refer to a “payment transaction” but rather a business transaction that may include several cryptocurrency payments over an extended period of time.  Amounts received from the same payer within a 24-hour period should be combined and treated as one transaction.

Information Required for Form 8300

The form must be filed within 15 days after the receipt of cash or cryptocurrency and contain:

1. The name, address, and taxpayer identification number of the person from whom the cash was received;
2. The name, address, and taxpayer identification number of the person on whose behalf the transaction was conducted (if the recipient knows or has reason to know that the person from whom the cash was received conducted the transaction as an agent for another person);
3. The amount of cash received, the date and nature of the transaction;
4. Any other miscellaneous information required by the form.

Electronic Filing Requirement:

For the most part, it has to be filed electronically.  The e-file requirement threshold is relatively low and applies to businesses that are required to file any combination equaling at least 10 of certain information returns other than Form 8300, including the Form 1099 series (i.e. Form 1099-B) and Form W-2. 

Important:

A person who files a return of information must verify the identity of the person from whom the reportable cash is received. Verification of the identity of a person who purports to be an alien must be made by examination of such person’s passport, alien identification card, or other official document evidencing nationality or residence. Verification of the identity of any other person may be made by examination of a document normally acceptable as a means of identification when cashing or accepting checks (for example, a driver’s license or a credit card). In addition, a return will be considered incomplete if the person required to make a return knows (or has reason to know) that an agent is conducting the transaction for a principal, and the return does not identify both the principal and the agent.

Importance of Identity Verification:

Any person that must file Form 8300 must furnish a single, annual, written statement to each person whose name is set forth in a return (“identified person”). The statement need not follow any particular format, but it must contain the name and address of the person making the return, the aggregate amount of reportable cash received by the person who made the information return during the calendar year in all cash transactions relating to the identified person, and a legend stating that the information contained in the statement is being reported to the IRS. 

Annual Statement Furnishing:

Statements must be furnished to an identified person on or before January 31 of the year following the calendar year in which the cash is received. A statement is deemed to be furnished to an identified person if it is mailed to the identified person at the identified person’s last known address. The statement also may be provided electronically if the recipient agrees to accept the statement in this format.

There are some important exceptions, please get in touch with a licensed professional to see if you are eligible. Consider utilizing marketplaces like IfindTaxPro. You can post your project and find the right tax specialist for you.

Record Maintenance Period:

Records for this filing must be maintained for five years. 

Voluntary Filing for Suspicious Transactions:

The form may be filed voluntarily to report any suspicious transaction for use by FinCEN and the IRS, even if the total amount does not exceed $10,000. A suspicious transaction is deemed to be a transaction in which it appears that a person is attempting to cause Form 8300 not to be filed, or to file a false or incomplete form.

IRS Form 8300 Reference Guide | Internal Revenue Service  

Recommendations

If you think that your business is going to be affected, we recommend that you start preparing for this new compliance necessity now to be ready on time.  Make sure to contact your tax adviser to make sure all is done on time.