Yahoo Finance: Tucked Inside Biden Infrastructure Bill: Unconstitutional Crypto Surveillance

Yahoo Finance: Tucked Inside Biden Infrastructure Bill: Unconstitutional Crypto Surveillance by Marta Belcher:

Before U.S. President Joe Biden signed the Infrastructure Investment and Jobs Act into law in November, many groups spoke out against a provision that broadens the tax code’s definition of “broker.” But there is another hidden cryptocurrency provision in this new law that amends part of the tax code in a way that will greatly expand financial surveillance, criminalize certain cryptocurrency transactions and, in my view, violate the Fourth Amendment of the U.S. Constitution.

This provision alters Section 6050i [6050I] of the tax code, which requires businesses that receive more than $10,000 in cash to collect identity details of the person paying in cash and report the transaction to the government. Failure to comply can be a felony punishable by up to five years in prison. The Infrastructure Investment and Jobs Act expanded 6050i [6050I] to include anyone who, in the course of conducting business, receives over $10,000 in digital assets.

I’ve already opined on this. § 6050I was first adopted in 1984, 38 years ago, and last amended before now in 1996. The IRS reminded taxpayers in 2014 and 2018 and on its website that cryptocurrency transactions are reportable income. Moreover, cryptocurrency exchanges are supposed to collect TIN information, too, just like any other business on transactions over $600. 6050I has always included “cash,” of course, but other forms of untraceable funds like money orders. (The new addition isn’t on thomas.gov yet.)

The WSJ explains and predicts other dire results:

But Section 6050I is obscure for a reason: In 1984 cash was already obsolete for economically significant, law-abiding use in the modern economy. So no one except criminals cared when Congress created one more reason to use banks instead of cash.

But Bitcoin and digital assets aren’t obsolete. The November amendment will thwart development of this new technology and effectively ban many uses of digital assets. It will push innovation out of the U.S. And it will entrench existing financial institutions and big tech at the same time it forces Americans to report one another or face a felony charge.

The new law also creates inconsistencies with other federal law. Section 6050I interacts with provisions of the Bank Secrecy Act in nuanced ways that the amendment didn’t consider. These should have been understood before Congress legislated on such an important technology.

Reporting Bitcoin in a transaction, the same as cash “will push innovation out of the U.S.”? Show me. Moreover, this SCOTUS will not hold it unconstitutional.

Finally, reporting starts in January 2024, per an accounting firm. See also fxstreet: How controversial crypto tax found its way into US infrastructure bill