The U.S. Internal Revenue Service (IRS) recently released a new version of the draft 1099-DA tax form, which aims to provide clear guidance for cryptocurrency brokers and individual investors to report specific digital asset transactions during the 2025 tax filing period. Compared with the first draft released in April 2024, the new draft has undergone significant improvements and adjustments. The IRS plans to publish this updated draft on its official website within the next 30 days for public review and feedback.
Although the new draft has resolved some key issues in the formulation of the final rule, experts still suggest that the IRS has the responsibility to further optimize and refine its guidelines to better serve cryptocurrency investors around the world. This move will not only help improve tax compliance, but also reflect the maturity of the cryptocurrency market.
IRS Form 1099-DA Update Highlights:
The U.S. Internal Revenue Service (IRS) has made important updates to the 1099-DA tax form to simplify the tax filing process for cryptocurrency investors and brokers and address some key issues:
Enhanced privacy protection: The new tax form removes the clause requiring investors to provide wallet addresses and transaction IDs, thereby protecting users’ privacy rights.
Simplified time record keeping: When filling in transaction information, investors no longer need to indicate the exact time when the transaction occurred, but only need to provide the transaction date.
De-identification of brokerage business types: Brokers no longer need to clearly indicate the specific type of brokerage business they engage in when submitting forms.
“The new Form 1099-DA is designed to help taxpayers better navigate the complex rules governing digital assets and ensure compliance,” Raj Mukherjee and Seth Wilks, directors of the IRS’s Office of Digital Asset Programs, said in a joint email statement.
These changes reflect the IRS’s proactive efforts to improve tax filing efficiency and protect taxpayer privacy, while also demonstrating adaptation and understanding of the unique needs of the cryptocurrency space.
Industry Views on IRS Form 1099-DA Updates
Cryptocurrency tax experts have expressed their approval of the IRS’s latest draft 1099-DA tax form, saying it is a significant improvement over previous versions.
Jessalyn Dean, vice president of tax information reporting at Ledgible, praised the new draft for its readability, noting that “the original draft was obscure and difficult to understand, while the new version is much clearer and easier to understand and operate.”
However, Andrew Rossow, attorney and CEO of AR Media Consulting, believes that while the new tax forms have made progress in terms of privacy protection, there is still room for improvement. Rossow stressed: "The IRS can do more to simplify the filing process for investors."
Rossow further explained that the IRS currently seems to be too focused on centralized exchanges, while ignoring the uniqueness of the decentralized finance (DeFi) ecosystem and its different operating rules. He warned that this approach could inhibit innovation and create an unfair competitive environment for the industry.
The Evolution of IRS Cryptocurrency Tax Regulations
The release of the draft version of the new 1099-DA tax form comes two months after the IRS updated its rules for brokerage reporting of virtual currency transactions, and the agency has made it clear that it will make addressing the taxation of decentralized and self-custodial brokerage businesses a priority over the next year.
Although the IRS has not yet officially finalized the final version of Form 1099-DA, it is expected that it may not be officially launched until the 2025 tax year. This series of actions by the IRS reflects its focus on improving tax transparency and supervision. Although this marks progress in the right direction, the industry generally believes that the new Form 1099-DA needs to be further improved to better meet the actual needs of virtual currency users and brokers.
This process not only needs to ensure tax compliance, but also take into account the uniqueness and technical complexity of the cryptocurrency field to promote the healthy development and innovation of the entire industry. #IRS #新税收草案 #纳税申报 #税务负担
Conclusion:
With the IRS's draft updates to the 1099-DA tax form, we see tax compliance taking steady steps forward in the cryptocurrency space. These updates not only respond to the need to protect privacy but also simplify the filing process, showing that the IRS is actively responsive to market feedback.
Facing the upcoming 2025 tax year, we expect the IRS to continue to work closely with the industry, absorb more professional opinions, and further optimize the tax form to adapt to the diversity and technological evolution of cryptocurrencies. We hope that in the future we can jointly shape a more mature, transparent, and innovation-friendly tax environment, laying a solid foundation for the future development of cryptocurrencies.
