The IRS, or Internal Revenue Service, revealed that New Draft Version of Tax Form 1099-DAwhich cryptocurrency brokers and investors use to report certain digital asset transactions from the upcoming tax period in 2025. The new version is a big step forward from the original draft submitted in April 2024.
The new draft regulation is available at Tax Authority Their website will remain open for 30 days. There are issues that have been fixed with this latest rule change. But experts believe that for the benefit of crypto investors everywhere, the IRS could come to a better understanding.
Key changes in the updated IRS Form 1099-DA:
– Eliminates the requirement for investors to disclose their wallet address and transaction ID, which is a privacy concern
– Cancel the requirement to include the time of occurrence of transactions, only the date is required
– Brokers do not need to indicate on the form the type of brokerage in which they are engaged.
“The new Form 1099-DA will help taxpayers comply with the complex world of digital assets,” Raj Mukherjee and Seth Wilkes, directors of the IRS’s Digital Assets Initiative Office, said in an email.
What do they say?
Cryptocurrency tax experts have hailed the revised Form 1099-DA as a major improvement over the previous form.
“The first draft was very cumbersome — hard to read, hard to know what to do with the information,” said Jessalyn Dean, vice president of tax information reporting at crypto tax firm Ledgible. “This version is easier to read.”
These changes come close to protecting privacy concerns but still don’t go far enough — the IRS could do a lot more to make this filing process easier for investors, said Andrew Russaw, attorney and CEO of AR Media Consulting.
While the IRS has been busy focusing on centralized exchanges, it has been ignoring this growing decentralized financial system that actually has different rules of thumb, Russo explained. This, he said, would stifle innovation and create an uneven playing field in the 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 reporting transactions in Virtual currency. The statement also added that engaging with regulated solutions, such as decentralized and self-custodial brokerages, 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. The IRS’s move in this regard clearly demonstrates the increased focus on disclosure and oversight. While the new Form 1099-DA is certainly a step in the right direction, it needs to be more targeted toward people who deal with virtual money.
Featured image from CNN, chart from TradingView
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