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The U.S. Internal Revenue Service (IRS) has released a revised draft of the 1099-DA tax form, which will be utilized by crypto brokers and investors to report specific transactions.
This updated version, scheduled to be implemented in 2026, seeks to enhance the reporting process while addressing privacy issues that were highlighted in the initial draft.
The 1099-DA will be employed by crypto investors interacting with brokers, mainly centralized exchanges such as Coinbase and Kraken, to report taxable occurrences related to the sale and exchange of digital assets.
The IRS’s latest draft significantly simplifies the form compared to the version initially proposed in April.
Revised Tax Form Removes Requirement for Wallet Addresses
The updated form removes the obligation for investors to provide their wallet addresses and transaction IDs, which had raised considerable privacy concerns.
Moreover, the new form no longer requires the inclusion of transaction times, only the dates, thereby further minimizing the amount of sensitive information that must be disclosed.
Another significant alteration is the elimination of a section that mandated filers to identify the type of broker involved in the transaction.
The earlier draft included options such as “kiosk operator,” “digital asset payment processor,” “hosted wallet provider,” “unhosted wallet provider,” and “other.” This section has been completely removed from the new draft, simplifying the form and making it less intrusive.
This revision follows the IRS finalizing regulations for crypto broker reporting requirements just two months prior.
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However, the agency has indicated that it will release separate regulations later this year to address decentralized and non-custodial brokers, which are not encompassed by the current rules.
Raj Mukherjee and Seth Wilks, Directors at the IRS Office of Digital Asset Initiative, highlighted the significance of the new form in assisting taxpayers with the complexities of digital asset reporting.
“The new Form 1099-DA will help taxpayers comply with the complex world of digital assets,” they remarked.
They noted that this form, in conjunction with the recent 6045 broker regulations, will facilitate the reporting process for digital asset gains and losses starting in the 2025 tax year.
The IRS has initiated a 30-day comment period for the public to provide input on the proposed 1099-DA, enabling stakeholders to express their views before the form is finalized.
More Countries Begin Taxing Crypto
Countries globally are increasingly acknowledging the necessity to tax cryptocurrency holdings as the digital currency market grows.
Brazil, for example, has enacted legislation effective from January 1, 2024, imposing a tax of up to 15% on profits from cryptocurrencies held abroad by Brazilian citizens.
In the meantime, India continues to impose strict taxes on crypto transactions, maintaining a 30% tax on profits and a 1% Tax Deducted at Source (TDS) on all transactions.
Similarly, the UK national tax authority requested crypto users last year to report any unpaid taxes they may have to avoid penalties.
The post IRS Updates Crypto Tax Form, Excludes Wallet Address to Ease Privacy Concerns appeared first on Cryptonews.
