Details of Public Law 117-58, section 80603 , Infrastructure Investment and Jobs Act, Information Reporting for Brokers and Digital Assets

This section expands the definition of broker to include a person who, for consideration, provides regular service of carrying out the transfer of digital assets on behalf of another person. A digital asset acquired on or after 1/1/2023 is identified as a specified security that will require a broker to provide an information return. This section defines a digital asset as a digital representation of value that is recorded and secured on a cryptographically secured distributed ledger or any similar technology, as specified by the Secretary of the Treasury.

Information reporting would be required for cash receipts of more than $10,000 for any person engaged in a trade or business and who, in the course of that trade or business received more than $10,000 in one transaction (or 2 or more related transactions) of any digital asset. A penalty would not be imposed for a digital asset information returns if failure to file is due to reasonable cause and not willful neglect. A broker that transfers a digital asset to an unassociated broker, or an address the broker has reason to know is also a broker, is required to file an information return with information about the transfer.

A broker would be required to file an information return for the gross proceeds of a digital asset on a return required to be filed, or statement required to be furnished, after 12/31/2023.

California does not conform to IRC sections requiring information returns be filed, but instead provides in RTC section 18631 that a copy of certain federal information returns, including the information return for the proceeds from broker and barter exchanges and returns relating to cash received in a trade or business, are required to be filed with FTB upon request.

California generally conforms to IRC sections 6724 for reasonable cause waiver, definition, and special rules, as of 1/1/2015 with modifications, but does not conform to the modifications made under this section.