November 22, 2021

Infrastructure Legislation Expands US Tax Information Reporting to Cryptocurrency and Other Digital Assets


Virtual currency and digital asset transactions are taxable in the same manner as other transactions in property. The Internal Revenue Service (the “IRS”) believes, however, that taxpayers transacting in virtual currencies and other digital assets may not necessarily have reported those transactions on their tax returns. While other transactions in property, including the holding or sale of stock or a debt instrument, generally require that a broker or counterparty file an information report with the IRS, e.g., Form 1099-B, Form 1099-DIV, and Form 1099-INT, there was a lack of clarity and guidance regarding similar information reporting for cryptocurrency and other digital asset transactions. Congress sought to address this issue in the Infrastructure Investment and Jobs Act (the “Act”), which was signed into law by President Biden on November 15, 2021. The Act includes several provisions relating to tax information reporting of cryptocurrency and other digital assets. Beginning with information returns filed in 2024 for the 2023 tax year, certain persons involved in the digital asset industry will be required to report transaction information to the IRS in a manner akin to that of brokers of securities. Additionally, the Act expands the current requirement for a trade or business to report the receipt of more than $10,000 in cash to include the receipt of digital assets. However, the scope of the Act’s digital asset information reporting requirements remains uncertain and the subject of ongoing congressional debate.  

Digital Assets Defined, Brokers Redefined

Prior to the enactment of the Act, a broker was required to file Form 1099-B to the IRS for each person for whom they sold stocks, commodities, debt instruments, options or other securities for cash during the tax year. The Act expands the Form 1099-B1 obligations by, in part, modifying the term “broker” to now include “any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person”2 (emphasis added). A “digital asset” is defined by the Act as “any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology as specified by the Secretary.”3

Thus, as likely intended by the drafters of the Act, a cryptocurrency such as Bitcoin would be captured by the Act’s definition of digital asset. The definition of broker also clearly captures cryptocurrency exchanges that help facilitate the purchase and sale of cryptocurrencies. However, the limits of the definition of digital asset and, by extension, a broker remain unseen given the broad text of the law. In fact, many in the digital asset industry have expressed concerns that these broad definitions may capture too many unintended market participants, such as, for example, cryptocurrency miners and blockchain software developers. Should any and all content stored on a "non-fungible token" (“NFT”) be captured by the definition of a digital asset? Should a cryptocurrency miner or a software developer that creates a new technology that operates on a blockchain platform be considered a broker? While there were several proposed amendments to the Act to limit this expansive new definition of “broker,” these amendments have not yet been incorporated into legislation.

The Act also expands basis reporting to include digital assets acquired on or after January 1, 2023.4 This will require brokers to track a customer’s cost basis in a digital asset, similar to what is done today for stock and debt. Many participants in the digital asset industry who are now considered a “broker” for Form 1099-B purposes will have to improve their systems in order to track this information. Relatedly, brokers of digital assets will be required to collect Forms W-9 from their customers. This may similarly present significant administrative challenges, especially relating to the collection of Forms W-9 from existing customers. Brokers will also need to consider whether to amend onboarding policies to now require such IRS forms.

Digital Assets as Cash

The Act also provides for an amendment to Section 6050I(d) that will include digital assets within the definition of cash subject to reporting requirements when involved in a transaction valued at over $10,000. Going forward any person that is engaged in a trade or business and receives more than $10,000 in cryptocurrency or other digital assets in a single transaction (or multiple related transactions) must file a Form 8300, which provides information on the transaction. Companies that are considering the acceptance of cryptocurrency as a form of payment should consider these increased reporting requirements, with failure to comply having significant financial consequences.

Possible “Fixes” Yet to Come

Despite the unsuccessful attempt to amend the Act to clarify the applicability of the information reporting requirements for digital assets, there remains support in Congress for amending the Act to narrow the scope of such information reporting requirements and to ensure that the definition of broker does not capture unintended persons.5 These members of Congress are concerned that the implementation of overly broad information reporting requirements may stifle the future development of digital assets and decentralized technologies and steer developers and innovation oversees. In addition, the US Treasury Department will have an opportunity to potentially address concerns about the scope of the Act’s information reporting requirements with the implementation of regulations. As of now, however, the new rules set forth in the Act pertaining to cryptocurrency and other digital assets are set to go into effect on information returns required to be filed, and statements required to be furnished, after December 31, 2023. 

The authors thank Mark Leeds, partner at Mayer Brown, for his thoughtful comments and suggestions to this Legal Update. Mistakes and omissions, however, remain the sole responsibility of the authors.



1 While the Act amends Internal Revenue Code (the “Code”) section 6045, which is the provision that governs Form 1099-B reporting, the IRS could create a new Form 1099, separate from Form 1099-B, that relates to the reporting of digital assets.

2 Code section 6045(c)(1)(D).

3 Code section 6045(g)(3)(D).

4 Code section 6045(g)(3)(B) and (C).

5 Please see the Keep Innovation in America Act, a bill introduced by Congressman Patrick McHenry (NC-10) available at See also the associated press release available at

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