The IRS has released a revised draft of the 1099-DA tax form, simplifying the reporting process for crypto brokers and investors in the upcoming 2025 tax period. This new version represents a significant improvement over the prior draft introduced in April 2024.
The updated draft is now available on the IRS website for public review for the next 30 days. Industry experts believe that while some issues have been addressed, there is room for further improvement to better assist crypto investors.
Changes in the Revised IRS 1099-DA Form:
– Elimination of the requirement to disclose wallet addresses and transaction IDs, addressing privacy concerns
– Only the date of transactions is now required, removing the need for specifying the time of transactions
– Brokers are no longer obligated to indicate the type of brokerage they are engaged in on the form
“The new Form 1099-DA aims to facilitate taxpayers’ compliance in navigating the complexities of digital assets,” stated IRS Office of Digital Asset Initiative Directors Raj Mukherjee and Seth Wilks.
Industry Feedback:
Crypto tax professionals have praised the revised 1099-DA form as a significant improvement from its initial draft.
“The first draft was challenging to interpret and work with,” noted Jessalyn Dean, vice president of tax information reporting at Ledgible, a crypto tax company. “This version is much more user-friendly.”
Andrew Rossow, CEO of AR Media Consulting and an attorney, acknowledged the progress in addressing privacy concerns but emphasized that more can be done by the IRS to simplify the filing process for investors.
Rossow highlighted the IRS’s focus on centralized exchanges while neglecting the evolving decentralized finance ecosystem, suggesting that further changes are necessary to support innovation and level the playing field in the industry.
The Future of Cryptocurrency Tax Regulations:
This latest development follows recent rules issued by the IRS for brokers regarding transaction reporting in virtual currency. The IRS intends to incorporate structured solutions, such as decentralized and self-custodied brokerage services, in its revised approach in the coming year.
While the final version of form 1099-DA is yet to be confirmed and may only be applicable for the 2025 tax year, the IRS’s emphasis on transparency and compliance is evident. However, the revised form should be tailored further to cater to individuals engaged in virtual currency activities.
Featured image from CNN, chart from TradingView
