reporting requirements
Subscribe to reporting requirements's Posts

Weekly IRS Roundup May 27 – May 31, 2024

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of May 27, 2024 – May 31, 2024.

May 28, 2024: The IRS released Internal Revenue Bulletin 2024-22, which includes the following:

  • Revenue Procedure 2024-25, which provides the inflation-adjusted limits related to health savings accounts and high deductible health plans under 223 of the Internal Revenue Code (Code) for calendar year 2025.
  • Treasury Decision 9995, which provides final regulations on clean vehicle tax credits under Code § 25E and 30D for the purchase of qualifying new and previously owned clean vehicles and the transfer and receipt of previously owned clean vehicle credits, effective July 5, 2024.
  • Treasury Decision 9996, which provides final regulations on obtaining extensions for allocating generation-skipping transfer (GST) tax exemptions and making specific GST-related elections for individuals and estates that did not make timely allocations or elections. By obtaining an extension, the effective date of a taxpayer’s GST-related election or allocation may date back to the original transfer date.

May 28, 2024: The IRS reminded US citizens and resident aliens abroad, including those with dual citizenship or on duty in the military, to file their 2023 federal income tax return by June 17, 2024.

May 28, 2024: The IRS announced that the application portal for the 2024 Low-Income Communities Bonus Credit Program, which increases the amount of energy investment tax credits for clean energy investments in low-income communities and on Native American land, is open for submissions.

May 29, 2024: The IRS released proposed regulations on the new technology-neutral clean electricity production tax credit in Code § 45Y and the clean electricity investment tax credit in Code § 48E, which are available for projects placed in service after December 31, 2024. The regulations provide rules for calculating greenhouse gas emissions rates, petitioning for provisional emissions rates and determining eligibility for these credits.

May 29, 2024: The IRS reminded taxpayers that certain common summertime activities, such as part-time work, business travel and home improvements, may result in tax benefits and reporting requirements.

May 30, 2024: The IRS announced that Direct File, a tax preparation program that allows eligible taxpayers to file their federal income tax returns for free directly through the IRS, will become a permanent option beginning in the 2025 filing season.

May 30, 2024: The IRS announced Fumino (Fumi) Tamaki as its new Chief Taxpayer Experience Officer.

May 31, 2024: The IRS issued Notice 2024-49, which provides the registration requirements for the Code § 45Z Clean Fuel Production Credit for clean fuels produced beginning January 1, 2025. The IRS urges qualifying fuel producers to register by July 15, 2024, since, among other requirements, fuel producers seeking to claim the credit must be registered at the time the fuel is produced.


Continue Reading

read more

Infrastructure Bill Provision Expands Cryptocurrency Reporting Requirements

On August 1, 2021, the US Senate unveiled the draft text of the Infrastructure Investment and Jobs Act (Bill), a highly anticipated $1 trillion infrastructure package negotiated by the White House and a bipartisan group of senators. As discussed below, the Bill includes a provision (Section 80603) that, if enacted in its current form, would amend the Internal Revenue Code (Code) to extend certain reporting requirements for transactions involving digital assets, including cryptocurrencies such as Bitcoin and Ether and other forms of digital tokens. The provision, which would generally go into effect on January 1, 2023, is intended to address a “tax gap” resulting from the underreporting of cryptocurrency transactions.


Code Section 6045 generally imposes reporting requirements on “every person doing business as a broker” with respect to sales affected by the broker on behalf of its clients. Under current law, such reporting is currently limited to sales of corporate stock, interests in trusts and partnerships, debt obligations, certain commodities and various associated derivatives. Pursuant to regulations, such sales are reported by the broker on Form 1099-B and the information required to be reported includes identifying information about the taxpayer and the property sold, the sale date and gross proceeds of the sale—and only with respect to the sale of a “covered security,” the adjusted basis of the property sold and the character of the gain or loss on the sale (i.e., long- or short-term capital gain).

For purposes of 1099-B reporting, a “broker” is defined to include a “dealer, a barter exchange, and any other person who (for a consideration) regularly acts as a middleman with respect to property or services.” A typical example of a broker subject to 1099-B reporting is a brokerage firm that facilitates transactions for customers in stocks, bonds and/or commodities.

The Bill expands the definition of a broker to include “any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person.” Unless otherwise provided by the US Department of the Treasury’s regulations, a “digital asset” means “any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology as specified by [Treasury].” A cryptocurrency exchange would be considered a broker under this language.

The “basis” reporting under Section 6045 only applies to “covered securities.” Under current law, the term covered securities generally includes corporate stock shares, debt obligations, certain designated commodities (and derivatives thereof) and other financial instruments. The Bill would expand the definition of covered securities to include any “digital asset.” Accordingly, brokers subject to Section 6045 will be required to report the adjusted basis and the character of the gain or loss upon the sale of digital assets, including utility tokens, stablecoins and asset-backed tokens.


Under current law, Code Section 6045A imposes additional reporting requirements that are generally applicable to the transfer of covered securities by one broker to another. Specifically, the transferor broker must [...]

Continue Reading

read more

Biden Administration Proposals Will Greatly Enhance IRS’ Ability to Identify Cryptocurrency Transactions

The Biden Administration and the Internal Revenue Service (IRS) continue to focus heavily on cryptocurrency tax enforcement issues. On May 20, 2021, the US Department of the Treasury (Treasury) released the American Families Plan Tax Compliance Agenda, a 22-page report detailing tax compliance measures that are to be included as part of US President Joe Biden’s American Families Plan. The report sets forth a number of initiatives designed to “close the tax gap,” identify the underreporting of tax liabilities and detect tax evasion. These measures, which are part of an $80 billion proposal for the IRS, would significantly enhance the agencies’ ability to address the challenges involved with finding taxes that result from virtual currency transactions.

The Treasury’s report notes that “[c]ryptocurrency already poses a significant detection problem by facilitating illegal activity broadly including tax evasion.” To address this issue, the Biden Administration is proposing “additional resources for the IRS to address the growth of cryptoassets.”

Most notably, the Biden Administration is proposing enhanced reporting requirements for domestic and foreign financial accounts that specifically address cryptocurrency. Financial institutions, including “cryptoasset exchange accounts and payment service accounts that accept cryptocurrencies” would be required to submit third-party annual reports of all “gross inflows and outflows” from business and personal accounts to the IRS using a form similar to the IRS 1099-INT. Additionally, “businesses that receive cryptoassets with a fair market value of more than $10,000 would be reported on” in a manner similar to how cash transactions are reported on Currency Transaction Reports. These new reporting requirements would dramatically increase the IRS’ ability to identify and detect unreported cryptocurrency transactions.

The report also reemphasizes the need to devote additional funding to the IRS. The Biden Administration is seeking $80 billion in additional funding so that the Treasury and IRS can, among other things, hire “new specialized enforcement staff” and “revitalize[e] the IRS’s examination of large corporations, partnerships, and global high-wealth and high-income individuals.”

Additionally, the Biden Administration plans to overhaul the IRS’ IT systems and capabilities. These IT enhancements are designed to “help support a staff capable of deploying new analytical techniques” and “developing machine learning capabilities [that] will enable the IRS to leverage the information it collects to better identify tax returns for compliance review.” Given the inherent difficulties in identifying cryptocurrency users who have failed to comply with the internal revenue laws, increased data collection and analytics capabilities would be invaluable for the IRS.

The IRS has already been ramping up its cryptocurrency tax enforcement efforts by issuing John Doe summons to various cryptocurrency exchanges, working with industry experts and foreign law enforcement. If implemented, the American Families Plan Tax Compliance Agenda would provide the IRS with extensive new tools and resources for these ongoing enforcement activities.

Practice Point: If you have engaged in cryptocurrency transactions, now is the time to analyze whether you have any civil or criminal exposure and prepare for a government inquiry by gathering all of your transaction records. For [...]

Continue Reading

read more




jd supra readers choice top firm 2023 badge