IRS Unveils Revised Crypto Tax Form, Simplifying Reporting Requirements

The Internal Revenue Service (IRS) has released an updated draft of Form 1099-DA, designed to streamline the reporting process for cryptocurrency transactions. This latest version, unveiled on August 8, 2024, addresses several concerns raised by the crypto community and tax professionals alike.

The new draft form, slated for implementation in the 2025 tax year, notably removes some of the more controversial reporting requirements present in its earlier iteration. Most significantly, the updated 1099-DA no longer requires taxpayers to provide their crypto wallet addresses or transaction IDs. Additionally, the precise time of day for transactions has been eliminated, with only the date now required.

IRS Commissioner Danny Werfel stated that the updated form would “provide more clarity for taxpayers and give them another tool to help them accurately report their digital assets transactions.” The changes have been largely welcomed by industry experts.

The revised form also eliminates the need for filers to identify their “broker type,” a requirement that had raised questions about the scope of reporting obligations for various crypto market participants. This change may alleviate some concerns within the decentralized finance (DeFi) sector, though questions remain about how comprehensively the new form addresses the diverse crypto ecosystem.

While the updates have been generally well-received, some experts caution that challenges persist in aligning tax compliance with the rapidly evolving crypto landscape. Andrew Rossow, CEO of AR Media Consulting, noted that while the new form addresses some issues, it “doesn’t necessarily solve the underlying challenges of tax compliance in the crypto space.”

The IRS has opened a 30-day public comment period on the draft form, inviting input from industry stakeholders and tax professionals. This feedback process may lead to further refinements before the form’s final version is released.