On November 15, 2021, President Biden signed the Infrastructure Investment and Jobs Act (the “Act”) into law. The Act includes several provisions related to the taxation of transactions involving digital assets, including cryptocurrency. Section 80603 of the Act amends several sections of the Internal Revenue Code of 1986 (the “Code”), increasing reporting requirements for U.S. taxpayers on digital asset transactions. These provisions have delayed effective dates. 
First, Section 80603 of the Act amends Section 6045(c)(1) of the Code, broadening the “definition of broker” to specifically include “any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person.”  The purpose of this amendment arguably is to address the underreporting or failure to report taxes on digital asset transactions. However, this broader definition of “broker” could have significant effects in the cryptocurrency space because the amended definition may be interpreted to include crypto miners, blockchain validators, and software developers as “brokers.” As such, lawmakers on both sides of the aisle have scrutinized this provision. On November 17, 2021, Rep. Patrick McHenry (R-NC) proposed the Keep Innovation in America Act (H.R. 6006) to revise the reporting requirements under Section 80603 of the Act to adopt a narrower definition of “broker.” Rep. McHenry’s proposal gained bipartisan support from nineteen cosponsors. On December 14, 2021, Sen. Rob Portman (R-OH) and Sen. Mark Warner (D-VA) issued a letter to the Treasury Secretary to adopt the broader definition of “broker” as passed in the Act. More recently, though, on January 26, 2022, Rep. Patrick McHenry (R-NC) and Rep. Tim Ryan (D-OH) issued a letter to the Treasury Secretary to adopt a narrower scope when interpreting the Act’s provisions relating to digital assets. The letter was signed by nine other lawmakers from both sides of the aisle. As such, whether the Treasury Department adopts the narrow or broad definition of “broker” remains to be seen.
Second, Section 80603 of the Act amends Section 6045(g)(3)(B) of the Code, including “any digital asset” as a “specified security.” The Act further defines “digital assets” to mean “any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology as specified by the Secretary.”  The Act also amends Section 6045(g)(3)(C) to indicate these updated reporting requirements will apply to digital asset transactions on or after January 1, 2023.  While this provision expands the definition of digital assets, the Treasury Secretary is given broad authority to specify what exactly constitutes a digital asset.
Third, Section 80603 of the Act amends Section 6050I of the Code, applying the requirement under Section 6050I of the Code to persons receiving digital assets.  Section 6050I of the Code requires persons to file a report providing information about cash transactions more than $10,000 in the course of trade or business. The Act expands the definition of “cash” under Section 6050I to include “any digital asset (as defined in section 6045(g)(3)(D))”  imposing reporting requirements for persons who receive more than $10,000 in digital assets from a business transaction. The Act further indicates that these additional reporting requirements are effective for “returns required to be filed, and statements required to be furnished, after December 31, 2023.” 
The purpose of these amendments is to allow the Internal Revenue Service (the “IRS”) to access additional information in connection to digital asset transactions to assess taxation requirements on digital assets. Section 80603 of the Act leaves room for interpretation and, given growing concerns of lawmakers on the broadened definitions of terms associated with digital asset transactions, it is still possible the IRS and the Treasury Department will adopt a narrower interpretation than prescribed in the Act. However, to comply with these additional reporting requirements, U.S. taxpayers engaged in digital assets transitions should track information for transactions taking place beginning on January 1, 2023 and monitor issuance of updated guidance from government agencies.
For more information or assistance with the new taxation provisions on digital assets, please contact Gregory F. Suher.
Greg is a Partner with Leech Tishman and a member of the Litigation Practice Group and is a member of the Emerging Cyber Technologies Industry Group. Greg is based in the Pittsburgh office and can be reached at firstname.lastname@example.org or 412.261.1600.
Flora Dellishad, JD/MBA Candidate 2023, Duquesne University School of Law, contributed to the research and drafting of this article.
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 See Act at Section 80603
 Id. at Section 80603(a)(3).
 See Act at Section 80603(b)(1)(A).
 Id. at Section 80603(b)(1)(C).
 Id. at Section 80603(b)(3).
 See Act at Section 80603(b)(3).
 Id. at Section 80603(c).