The IRS, or the US Internal Revenue Service, has published modern version of the 1099-DA tax form designused by cryptocurrency brokers and investors to report certain digital asset transactions for the upcoming 2025 tax period. The modern version is a significant step forward from the original design presented in April 2024.
The draft of the modern regulation is available on the website IRS website for the next 30 days. There are issues that have been fixed with the modification of this final rule. But experts believe that for the good of cryptocurrency investors everywhere, the IRS could reach a better understanding of things.
Key changes in the updated IRS Form 1099-DA:
– Eliminate the need for investors to disclose their wallet address and transaction ID, which poses a privacy risk
– The need to provide the time at which transactions took place has been eliminated, only the date is required
– Brokers do not have to indicate in the form what type of brokerage activity they are engaged in
“The new Form 1099-DA will help taxpayers adapt to the complex world of digital assets,” IRS Office of Digital Asset Initiative Directors Raj Mukherjee and Seth Wilks said in an email.
What do they say?
Cryptocurrency tax experts have praised the revised Form 1099-DA, calling it a significant improvement over the previous version.
“The first draft was overwhelming—hard to read, hard to know what to do with the information,” said Jessalyn Dean, vice president of tax information reporting at cryptocurrency tax firm Ledgible. “This version is much more readable.”
Andrew Rossow, attorney and CEO of AR Media Consulting, said these changes go a long way toward protecting privacy, but they still don’t go far enough — there’s a lot more the IRS can do to make the tax filing process easier for investors.
Rossow explained that while the IRS has focused on centralized exchanges, it has ignored this growing decentralized financial ecosystem, which actually has different rules of operation. That will limit innovation, he said, and create an uneven playing field in the industry.
The World of Cryptocurrency Tax Laws: The Way Forward
The modern plan comes just two months after the Internal Revenue Service issued regulations for brokers to report transactions in virtual currency. The statement also said that treating organised solutions such as decentralised and self-managed brokerage firms will be part of a modern development direction in the coming year.
The IRS has not yet finalized the 1099-DA; it may not be released until tax year 2025. It is clear that the IRS’s move in this regard shows a greater emphasis on disclosure and surveillance. While it is certainly a move in the right direction, the modern 1099-DA needs to be more targeted to those dealing in virtual money.
Featured image from CNN, chart from TradingView
