Digital Asset Reporting Alert: Form 8300 – Action Required

This article will continue to be updated to provide additional information as Treasury guidance or other information becomes available.

At a glance:

• The main takeaway: The Infrastructure Investment and Jobs Act broadened the categories of transactions subject to reporting under Section 60501.
• The impact on your business: For any individual or entity who receives digital assets with fair value exceeding $10,000 in a singular transaction or a series of transactions, is required to report those transactions to the IRS and FinCEN. Failure to do so will result in significant civil and criminal penalties.
• Next steps: Aprio’s Blockchain Tax/KYC/AML/BSA Practice can guide you in implementing the proper policies to enable your systems to comply with these filing requirements.

Aprio established a dedicated help desk to support our clients. If you are an Aprio client, please submit any inquiries or questions to 8300@aprio.com.

View the on-demand January 11, 2024, workshop video below for additional information and report/filing requirements discussion.

The full story:

The Infrastructure Investment and Jobs Act (Infrastructure Act), enacted in 2021, broadened the categories of transactions subject to reporting under Section 60501. The Infrastructure Act significantly expanded the definition of cash for informational reporting. The new definition of cash encompasses both physical currency and any digital asset. [1] The definition of digital assets encompasses all types of digital assets as well as stablecoins.

Effective January 1, 2024, should an individual or entity receive digital assets with fair value exceeding $10,000 in a singular transaction (or a series of transactions), is required to report said transactions to the Internal Revenue Service (IRS) and the Financial Crimes Enforcement Network (FinCEN).

Click here to view the instructions for IRS Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business filing requirements. The expanded filing requirement will have significant implications to the individuals and companies that engage in digital asset transactions and marks a notable expansion of the Bank Secrecy Act, carrying substantial compliance and reporting implications and burdens. These ramifications apply not solely to blockchain and digital asset enterprises but also to any individual or business engaging in digital asset business transactions within the United States and globally. The final version of Form 8300 from the IRS was not released until late December 2023.

On January 16, 2025, The Treasury and the IRS announced that no reporting is required for the receipt of digital assets in the same manner as cash until specific Treasury Regulations are issued.

At this point, there is no available timeline for final IRS regulations though we expect final guidance to become available during 2024.

Filing Requirements

Each person (or business) engaged in a trade or business who, in the course of trade or business, receives more than $10,000 in one transaction (or in two or more related series of transactions), must file Form 8300 with the IRS and FinCEN. [2]

The report:

1. Must be filed within 15 days after receipt of the payment that exceeds $10,000 in fair value [3]; and
2. Must be filed electronically if at least 10 information returns of one or more type, other than Form 8300, must be filed [4];
3. If eligible, the form can be mailed to the IRS.

Reporting Requirements

Trade or Business Transactions

Trade or business transactions include:

• Any transaction by a corporation received in connection with a trade or business;
• Non-gaming business activity of a casino, such as shops, restaurants and hotels, are considered separate trades or businesses;
• Payments received for services rendered or reimbursement of expenses, including amounts received to be held in trust;
• Payments received by a collection agency for any one account;
• Sales of assets used in a trade or business; and,
• Transactions in which a person acts on behalf of another.

Transactions and Related Transactions

The IRS, in its historical application, has adopted a broad definition for reportable transactions. A reportable transaction, singularly or as part of a series, constitutes the underlying event prompting the transfer of digital assets. Such transactions may include, but are not limited to:

• Sale of goods or services;
• Sale of real property;
• Sale of intangible property;
• Rental of real or personal property;
• Exchange of fiat currency for digital assets and vice versa;
• Exchange of digital assets for digital assets, including stablecoins;
• Establishment, maintenance, or contribution to an escrow, trust, or custodial arrangement; and/or
• Debt payments.

Identity of Individual/Entity from Whom the Cash Was Received

To accurately complete Form 8300, the recipient must acquire essential information from the payor, including, but not limited to, their full legal name, address, tax identification number, date of birth, the nature of their occupation, and the country of citizenship, if not the United States. Furthermore, the recipient is required to authenticate the payor’s name and address by scrutinizing a document typically accepted as a form of identification when cashing checks, such as a driver’s license, passport, alien registration card, or other official document.

Civil and Criminal Penalties

Non-compliance with the requirement to furnish the necessary information within 15 days may lead to the imposition of both civil and criminal penalties.

Civil penalties, governed by Sections 6721 and 6722, include a $250 penalty per occurrence for non-intentional failures, rising to the greater of $25,000 or the transaction amount (not exceeding $100,000) for intentional failures. Mitigating rules and reasonable cause defenses are available.

A failure to furnish correct payee statements may lead to a $250 penalty per occurrence (up to $3,000,000 annually), increasing to the greater of $500 or 10% of the aggregate amount for intentional failures. Similar mitigating rules and a reasonable cause defense exist.

Criminal penalties include fines up to $25,000 (or $100,000 for corporations) or imprisonment for up to one year. Civil penalties, including the greater of the transaction amount (up to $100,000) or $25,000 for willful violations, and varying penalties for structured transactions and negligent failures, with higher fines for patterns of negligent activity.

Title 31 imposes harsher criminal penalties, with fines up to $250,000 or imprisonment up to five years for willful violations under Section 5331. If the violation involves more than $100,000 in a 12-month period or occurs while violating another law, the fine ceiling increases to $500,000 or imprisonment up to 10 years.

Challenging Issues

Businesses engaging in digital asset transactions are confronted with numerous challenging issues pertaining to the reporting of transactions on Form 8300. Some of the challenging transaction issues to report include, but are not limited to:

1. Decentralized finance senders and recipients;
2. mining;
3. staking and staking pools;
4. collateralized and non-collateralized lending;
5. transactions with multiple unknown parties (gas fees, etc.);
6. crypto derivatives and cross-chain transactions;
7. smart contract execution;
8. swaps and derivatives;
9. stablecoins;
10. wrapped assets;
11. thinly traded or non-traded digital assets;
12. certain layer-0, layer-1 and layer-2 platforms and networks; and
13. non-fungible tokens.

Aprio is advising clients on how to file Form 8300 when the data to report is unclear and lacks clarity which may lead to certain transactions being subjected to duplicative reporting, you want to avoid non-reporting. Many transactions may not have a clear fair market value since the digital assets could be newly created, thinly traded on exchanges, or not traded on exchanges. In these cases, Aprio’s valuation team can assess a proper fair value to report.

The time to move forward and get compliant is now

Since November 2021, we have been advising clients to proactively prepare for impending filing requirements, and the time for action is now. Aprio is ready to assist you in navigating the compliance challenges and developing optimal best practices to align with your business needs.

Aprio established a dedicated help desk to support our clients. If you are an Aprio client, please submit any inquiries or questions to 8300@aprio.com. The IRS and FinCEN have deferred Form 8300 compliance until additional guidance is issued on January 16th, 2024. However, businesses with digital asset transactions exceeding $10,000 during 2024 should start implementing AML/KYC procedures and necessary internal controls to gather, analyzing, and summarizing the data (qualitative and quantitative) to enable future report compliance and filings.

It will take time to get ready for compliance. Take action today.

Aprio’s Blockchain Tax/KYC/AML/BSA Practice can guide you in implementing the proper policies to enable your systems to comply with these filing requirements. We have already advised clients to implement procedures to file IRS Form 8300, and we can guide you along the way.

Aprio’s Certified Anti-Money Laundering Specialists (CAMS) can assist you with AML/KYC risk assessment, verification procedures, overall internal controls implementation, reporting requirements, and AML audit.

Schedule a consultation with Aprio today!

Related Resources:

IRS Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business filing requirements

Big Changes for the Crypto World Part 1: How the Infrastructure Investment and Jobs Act will Impact Cryptocurrency

Aprio Business Valuation Services and Advisory

Aprio Forensic Accounting Services

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[1] Section 6045(g)(3)(D) defines “digital asset” means any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology as specified by the Secretary of the Treasury. Digital asset include, but are not limited to, cryptocurrencies/coins, tokens, non-fungible tokens, stablecoins, digital securities, utility and security tokens, and smart contracts.

[2] The term “person” is not defined the same way under Titles 26 and 31, but the regulations explicitly bring them into conformity using the definition of person at IRC 7701(a)(1), Person. 60501, In General, and 26 CFR 1010.330(a)(1)(i), In General. IRC 7701(a)(1), Person, defines “person” to mean and include an individual, trust, estate, partnership, association, company, or corporation. “Person”, is also defined in 31 USC 5312(a)(5), as an individual, corporation, company, association, firm, partnership, society, joint stock company, trustee, a representative of an estate, and, when the Secretary prescribes, a governmental entity.

[3] If that date falls on a Saturday, Sunday, or legal holiday, file the form on the next business day.

[4] The number of Form 8300 does not impact the 10-information-return threshold. Each informational return (Form 1099-NEC, Form 1099-MISC, etc.) is counted as a separate form for the 10-information-return threshold.