OFFICIAL PUBLICATION OF THE NEBRASKA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS

Pub. 3 2021 Issue 6

The-$1.2T-Infrastructure-Bill-Bitcoin

CPA Insider: The $1.2T Infrastructure Bill

On Nov. 15, 2021, President Biden signed the $1.2 trillion bipartisan infrastructure bill into law after a congressional vote.

The historic bill contains $550 billion of new federal investment over five years to improve transportation, roads, bridges, and more, signaling a considerable investment in the country’s infrastructure.

It’s crucial to note that the bill is not as large as once imagined—formerly, it was $3.5 trillion; however, it is still a massive amount at $1.2 trillion.

Funding for the bill comes from specific areas and has created a cryptocurrency dilemma for many investors by treating failure to report as a felony.

Targeting Cryptocurrency


The terms state that any person who executes transfers of digital assets, including Bitcoin, Ether, and Non-Fungible Tokens (NFTs), needs to report those transactions to the IRS, as well as reporting any digital asset transaction of more than $10,000. The rule is comparable to the mandates that exist for stock and bond trades today.

Cryptocurrency supporters fear the new rules target the following groups unfairly:

  • everyday users
  • developers
  • cryptocurrency miners

Cryptocurrency early adopters worry they will need to report information that they may be unaware of, which puts themselves in the position for potential felony convictions and five-year prison terms.

Under the new infrastructure law, the definition of a broker under 26 U.S. Code § 6045(c)(1) expands to include those who operate trading platforms for cryptocurrency and other digital assets. In addition, brokers will be subject to new reporting requirements for purchases, sales, transfers, and transactions involving cryptocurrency. Industry supporters say the definition is “too broad,” affecting the transfer of digital assets. Transfers between self-custody wallets and cryptocurrency exchanges would need to be reported by the exchange, leading to an incorrect cost base.

IRS: Caught Between Present & Future


The IRS has no idea what coins an account holder owns or the potential income they may accrue. While investments, such as stocks, mutual funds, or exchange-traded funds (ETFs), are held at brokerage firms or banks, which are also required to submit account-holder information to authorities, coins such as Bitcoin or Ethereum fall into a gray area. Cryptocurrency can be stored on an exchange, in a digital wallet, or in a hard wallet, which is offline. Outside of exchanges, the other options leave the reporting of cryptocurrency open to the holder’s interpretation.

The IRS is keenly aware of the need to make new rules requiring reporting from both entities holding the accounts and the account holders themselves. They are working on adding new definitions to current laws, which only address traditional, tangible assets.

New rules from the IRS will probably need to incorporate current digital assets and future variations yet to be invented.

New Rules & Definitions


The bill will require the IRS to define a “broker” of digital assets and “digital assets,” but both have yet to be defined. This section of the bill is expected to lead to public and private battles fought in Congress and the courts before it takes effect in January 2024.

We must remember that it’s estimated that 50 million Americans are likely to buy cryptocurrency in the next year signaling that blockchain technologies are no longer a fad but are here to stay.

What Will Your Clients Want to Know?

  • Starting in 2023, brokers will be required to issue a 1099-B, notifying the IRS directly of cryptocurrency transactions.
  • Payments of $10,000 or more must report the identity of the sender to the government.

Sharon Kreider, CPA has been helping thousands of tax preparers get ready for tax season each year for the past two decades. With a keen ability to demystify complex individual and business tax legislation, Kreider instructs Western CPE tax seminars and presents regularly for the AICPA, the California Society of Enrolled Agents, and A.G. Edwards. She gained her detailed, hands-on tax knowledge through her extremely busy, high-income tax practice in Silicon Valley. For more information, contact Western CPE at (800) 822-4194 or wcpe@westerncpe.com. ©2021 Sharon Kreider