The United States tax agency has released revised forms for crypto investors, aiming to simplify taxes for digital asset holders.
The 1099-DA, released as a draft on Friday, will provide “easier and clearer” reporting for tax filers with cryptocurrency investments, the IRS said in a statement on Friday. The revised form removes requirements from the previous version, including questions that some digital asset advocates believe invade the privacy of cryptocurrency holders.
Most notably, the latest version of the form no longer requires filers to enter their cryptocurrency wallet addresses and transaction IDs, nor does it require when cryptocurrency transactions related to investment activities occurred during the tax year.
Additionally, taxpayers who work as cryptocurrency brokers do not need to specify what type of broker they are.
The latest 1099-DA revisions ease some privacy concerns for digital asset investors, but U.S. tax authorities can do more to make the filing process easier for these investors, said Andrew Rossow, CEO and attorney at AR Media Consulting. Decryption.
“While the new form may address some of these issues, it doesn’t necessarily solve the fundamental challenges of tax compliance in the crypto industry,” Rossow said on Friday. “Crypto taxation remains complicated for individuals and businesses alike, especially with the SEC/CFTC still debating swim lanes.”
Additionally, he said that despite the diversity of the cryptocurrency market as a whole, the IRS appears to be focused only on the most mainstream instruments.
“The focus on centralized exchanges like Coinbase and Kraken certainly overlooks the burgeoning DeFi ecosystem as we know it, which operates on fundamentally different principles,” Rossouw said. “This creates an uneven playing field and could stifle innovation in the cryptocurrency industry.”
Not only would the IRS increase compliance costs for cryptocurrency businesses, but its data collection could create new risks, he added.
“Greater government access to financial data risks abuse and unintended consequences,” Rossow warned, pointing out the possibility of data leaks and identity theft.
The United States first released the draft 1099-DA tax form for crypto investors in April 2024. According to the IRS, the public has 30 days to comment on the updated draft 1099-DA.
It’s unclear when the final form will be released, and when the revised 1099-DA will debut, but it’s widely believed the form will start being used for the 2025 tax year.
The IRS did not immediately respond to a request for comment. Decryption.
Editor: Ryan Ozawa.
Daily Report Newsletter
Enjoy today’s top news, original features, podcasts, videos and more every day.
