The IRS has introduced an updated draft of the 1099-DA form, specifically designed for crypto investors and brokers to report their transactions. This new version aims to simplify and streamline the tax reporting process, addressing previous concerns about privacy and data reporting burdens.
Key Updates to the 1099-DA Form
Simplified Requirements: The updated form no longer requires sensitive details such as wallet addresses, transaction IDs, or the time of transactions. Only the date of transactions is needed, making the reporting process more straightforward.
Removed Sections: The IRS has eliminated the section asking filers to identify their broker type, which was present in the initial draft. This change reduces complexity and focuses the form on essential data.
Industry Response
The crypto industry has reacted positively to these updates. Experts, including Drew Hinkes, a crypto lawyer at K&L Gates, have praised the revised form for being "massively improved" and less burdensome for users. These changes are seen as a significant step towards more accessible and privacy-conscious tax reporting.
What’s Next?
Starting in 2026, the 1099-DA form will be required for reporting certain crypto transactions. The IRS has also announced plans to release additional regulations later this year for decentralized and non-custodial brokers, further clarifying the tax obligations in the digital asset space.
Public Input Welcomed
The IRS is currently seeking feedback on the draft form from the public and industry stakeholders. They have provided a 30-day window for comments, allowing for further refinement of the form based on input from those who will be using it.
Conclusion
The IRS’s new 1099-DA form represents a significant advancement in how crypto transactions will be reported for tax purposes. By simplifying the process and addressing privacy concerns, the IRS is working to make digital asset tax compliance more straightforward for everyone involved.
For more information or to submit your feedback, visit the IRS website or consult with a tax professional specializing in digital assets.
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