Getting your Trinity Audio player ready...
|
The United States Internal Revenue Service (IRS) has posted an early draft of the updated tax Form 1099-DA for digital asset investors, dropping several controversial demands from previous drafts, including a requirement for filers’ to submit their digital asset wallet addresses and transaction IDs.
The new tax Form 1099-DA, “Digital Asset Proceeds from Broker Transactions,” is expected to come into use in 2025 and will be issued to traders and investors annually by digital asset brokers, beginning in January 2026.
The IRS revealed its first draft of 1099-DA in April 2024, giving members of the public 30 days to provide feedback and input on the draft.
Having considered the feedback, the revised 1099-DA form, released as a draft on Friday, aims to offer more “ease and clarity” to tax filers with digital asset investments, not least by omitting requirements from its previous iteration that some digital asset proponents considered intrusive.
As well as no longer asking for filers’ digital asset wallet addresses and transaction IDs, the latest iteration also does not require the time transactions were pertinent to their investment activity for the given tax year.
Additionally, tax filers who serve as digital asset brokers do not have to specify which type of broker they are.
“This new form will provide more clarity for taxpayers and give them another tool to help them accurately report their digital assets transactions,” said IRS Commissioner Danny Werfel.
“We know third-party reporting greatly improves compliance with the nation’s tax law. This step will also help us make sure digital assets are not used to hide taxable income, including in high-income categories, while providing taxpayers who play by the rules more information to accurately report their income.”
He added that digital assets greatly increase the complexity of the tax system and that the IRS will “continue to work to make improvements in this area as part of our larger efforts to transform the agency.”
“We will continue working this area to help ensure the tax laws are met while working to reduce burden wherever possible to help taxpayers in this challenging area,” said Werfel.
As part of the process that will lead to a final version of the form, the IRS published the new draft of the form, along with the instructions for the ‘recipients.’
The tax agency said it expected to post the draft instructions for ‘filers’ soon, adding, “Once the draft filer instructions have been posted, a notice will be published in the Federal Register to allow for a 30-day comment period.”
The exact release date of the final 1099-DA remains unclear, but the form will likely begin being used for the 2025 tax year.
Watch: It’s time for corporates to turn to public blockchain solutions
New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.