Last August I wrote a post noting that as of January 1, 2024 cryptocurrency is considered to be cash for Form 8300 reporting requirements. Here’s what I wrote last August:
A Twitter/X post from John Reed Stark reminded me about an issue that may soon impact you if you are a professional gambler playing on one of the current US-facing sites such as Ignition or America’s Card Room (ACR). FINCEN (the Financial Crimes Enforcement Network) Form 8300 requires anyone in business–this includes individuals (sole proprietors), partnerships, LLCs, and corporations–to report cash transactions of more than $10,000. This law isn’t new, and like almost anything related to money laundering/FINCEN there are draconian penalties for not complying. What is new is that cryptocurrency is considered “cash” for this purpose under Section 6050I of the Infrastructure Act (which passed in November 2021). This section of the law takes effect on January 1, 2024.
Form 8300 requires you to inform FINCEN (or the IRS if you’re not subject to electronic filing rules) within 15 days of any transaction of more than $10,000:
“Who must file. Each person engaged in a trade or business who, in the course of that trade or business, receives more than $10,000 in cash in one transaction or in two or more related transactions, must file Form 8300. Any transactions conducted between a payer (or its agent) and the recipient in a 24-hour period are related transactions. Transactions are considered related even if they occur over a period of more than 24 hours if the recipient knows, or has reason to know, that each transaction is one of a series of connected transactions.”
I am receiving a steady stream of questions regarding this, so here’s a primer.
- There are two elements needed to have to report cryptocurrency you receive. You need to (a) be in a trade or business and (b) receive more than $10,000 in cash (or cryptocurrency) in one or more related transactions. If both elements aren’t there, no reporting is required.
- If you are an American professional gambler, you are covered by this rule.
- The rule covers only receiving cryptocurrency, not sending cryptocurrency.
- It only covers receiving cryptocurrency as part of a trade or business. Let’s say you purchase $20,000 of cryptocurrency for investing; this generally wouldn’t be covered by the reporting requirements of Form 8300.
- Reporting is not required if the transaction occurs entirely outside of the United States.
So let’s look at a couple typical examples.
- You are a professional gambler residing in the United States. You cash out from an online gambling site based in Costa Rica and receive $10,500: $5,000 as a bank transfer and $5,500 of cryptocurrency. The transaction must be reported on Form 8300.
- You are a professional gambler. You are “staked” (backed) by June. She sends you a personal check for $20,000 to stake you. Personal checks are specifically exempt from Form 8300 filing requirements. “Cash does not include…[p]ersonal checks drawn on the account of the writer, a cashier’s check, bank draft, traveler’s check or money order with a face value of more than $10,000.” (Similarly, wire transfers are not reportable on Form 8300.)
From the instructions of Form 8300 it is absolutely doable to report a cashout from an online gambling site such as America’s Cardroom. You do not need to include a taxpayer identification number for a non-US business: “You are not required to provide the TIN of a…foreign organization that…[d]oes not have an office or place of business, or a fiscal or paying agent, in the United States.” You may need to put a comment on Form 8300 (at the bottom of page 2) to note this. You likely also need to comment that the “cash” received was (say) Bitcoin.
Of course, we’re dealing with the federal government so there are issues. While Form 8300 was revised as of December 31st, the revision doesn’t include a place for cryptocurrency. While it’s possible to report a business sending cash, the reporting always asks for the individual who sent it. Well, that won’t be doable for most cryptocurrency transactions–again, a comment will be needed.
I suspect this will be a mess as FinCEN hasn’t thought this through; indeed, I think they’re just superficially aware of this issue and are really concentrating on BOI reporting. In any case, I’ll see what comes of yet another government mandate.