New Draft Eases Tax Filing Burden

The IRS, or US Internal Revenue Service, has unveiled a fresh draft version for the 1099-DA tax form, used by crypto brokers and investors to report certain digital asset transactions from the upcoming tax period in 2025. The new version is a considerable step forward from the original draft presented in April 2024.

The new draft regulation is available on IRS website for the next 30 days. There are problems that have been fixed with modification of that last rule. But experts consider that, for the benefit of crypto investors everywhere, the IRS could achieve a better grasp of things.

Key Changes In The Updated IRS 1099-DA Form:

– Eliminate forcing investors to disclose their wallet address and transaction ID, a privacy concern
– Eliminate forcing the inclusion of the time transactions took place, only the date is required
– Brokers do not need to indicate on the form what type of brokerage they are involved in

“The new Form 1099-DA will help taxpayers comply with the complex world of digital assets,” IRS Office of Digital Asset Initiative Directors Raj Mukherjee and Seth Wilks said in an email.

What They Are Saying

Crypto tax professionals praised the revised form 1099-DA as a vast improvement over its predecessor draft.

“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 crypto tax company Ledgible. “This version is much more readable.”

Andrew Rossow, attorney and CEO at AR Media Consulting, said these changes get closer to protecting privacy concerns but still are not enough—the IRS can do a lot more to make this filing process easier for investors.

Rossow explained that while the IRS was busy focusing on the central exchanges, it was ignoring this growing decentralized finance ecosystem that actually has different rules for operating. It will throttle innovation, he said, and create an unleveled playing field in this 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 about reporting on transactions in virtual currency. The statement also said that treating organized solutions, like a decentralized and self-custodied brokerage businesses, will be part of its renewed direction in the upcoming year.

The IRS has not yet finalized form 1099-DA; it might only come out for the 2025 tax year. Clearly the move made by the IRS in this regard shows increased emphasis on disclosure and observation. Although certainly a move in the right direction, the new 1099-DA form needs to be geared much more to people dealing with virtual money.

Featured image from CNN, chart from TradingView