Skip links

Megan L. Brackney Quoted In Tax Notes Article Entitled “Implementing the New Crypto Reporting Guidance”

Megan L. Brackney was quoted in a recent Tax Notes article entitled “Implementing the New Crypto Reporting Guidance,” published on November 22, 2021. Brackney analyzes the IRS’s existing verification rules for cash in 26 CFR 1.6050I in consideration of potential new verification rules for digital asset transferring resulting from the passage of the Infrastructure Investment and Jobs Act (H.R. 3684).

The article notes:

The existing rules and instructions for complying with section 6050I for cash are comprehensive, so there’s reason to hope that the IRS will produce similarly detailed guidance for digital asset transfer reporting too. “The Form 8300 and its instructions and the related Internal Revenue Manual provisions are very helpful; they cover pretty much everything,” said Megan L. Brackney of Kostelanetz & Fink LLP. That strong framework will be a good starting point for the IRS to draft similarly clear rules for digital assets.

Brackney pointed out that the verification rules in reg. section 1.6050I-1(e)(3)(ii) require that the filer of Form 8300 verify the identity of the counterpart with an identification document. For a foreign person from whom reportable cash is received, that’s done by examining their passport or other official document proving nationality or residence, and the identity of others is verified by means 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).” This requirement is likely to be a particular challenge for digital assets, because unlike for cash, the transfers of digital assets don’t occur face-to-face. “If Treasury and the IRS say that we’re going to do that verification exactly like for cash, it’s going to be really hard to comply,” Brackney said. 

Click here to read the full article.