The IRS, or Internal Revenue Service of the United States, has revealed A new draft version of the 1099-DA tax formused by cryptocurrency brokers and investors to report certain digital asset transactions for the upcoming fiscal period in 2025. The new version is a significant improvement over the original draft submitted in April 2024.
The new draft regulation is available at Tax authorities website for the next 30 days. There are issues that have been fixed with the amendment to that latest rule. But experts believe that, for the benefit of cryptocurrency investors around the world, the IRS could gain a better understanding of things.
Key changes to the updated IRS Form 1099-DA:
– Remove the obligation for investors to reveal their wallet address and transaction ID, a privacy concern
– Eliminate the obligation to include the time when the transactions were made, only the date is required
– Brokers do not need to indicate on the form what type of brokerage they are involved in.
“The new Form 1099-DA will help taxpayers stay compliant in the complex world of digital assets,” IRS Digital Assets Initiative Directors Raj Mukherjee and Seth Wilks said in an email.
What they are saying
Crypto tax professionals praised the revised Form 1099-DA as a vast improvement over its previous draft.
“The first draft was overwhelming — hard to read, hard to know what to do with the information,” said Jessalyn Dean, vice president of tax information reporting at cryptocurrency tax firm Ledgible. “This version is much more readable.”
Andrew Rossow, an attorney and CEO of AR Media Consulting, said these changes come close to addressing privacy concerns, but they still aren’t enough: The IRS can do much more to make this filing process easier for investors.
Rossow explained that while the IRS was focused on central exchanges, it was ignoring this growing decentralized financial ecosystem that actually has different rules of operation. This will stifle innovation, he said, and create an uneven playing field in this industry.
The world of cryptocurrency tax regulations: the way forward
The new plan comes just two months after the tax agency issued rules for brokers on how to report transactions in virtual currency. The statement also said that addressing organized solutions, such as decentralized and self-custodial brokerage businesses, will be part of its renewed direction in the coming year.
The IRS has not yet finalized Form 1099-DA; it may not be released until tax year 2025. Clearly, the IRS’s move in this regard shows an increased emphasis on disclosure and enforcement. While it is certainly a step in the right direction, the new Form 1099-DA needs to be much more geared toward people who handle virtual money.
Featured image from CNN, chart from TradingView
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