IRS Releases Draft of Updated Form 1099-DA for Reporting Digital Asset Transactions

The Internal Revenue Service has recently released an early draft of the updated Form 1099-DA, which is used by brokers to report specific sale and exchange transactions of digital assets starting in 2025. This form is expected to be sent to taxpayers and the IRS in early 2026.

The new draft of Form 1099-DA, titled "Digital Asset Proceeds From Broker Transactions," has been updated to align with the final regulations for custodial broker reporting. It also includes transitional relief outlined in Notice 2024-56, Notice 2024-57, and Revenue Procedure 2024-28. Interested parties can provide feedback on the draft form via the forms and publications comments page on IRS.gov.

IRS Commissioner Danny Werfel stated, "This new form will provide more clarity for taxpayers and equip them with another tool to accurately report their digital asset transactions. Third-party reporting significantly enhances compliance with tax laws, ensuring digital assets are not used to conceal taxable income. This will help taxpayers adhere to tax laws while providing accurate income reporting."

Werfel emphasized the complexity digital assets introduce to the tax system and highlighted the IRS's ongoing efforts to enhance processes in this area. The agency aims to streamline tax laws while minimizing burdens on taxpayers navigating this intricate landscape.

To facilitate the development of the final form, the IRS has posted the draft version of Form 1099-DA on IRS.gov, along with instructions for recipients. Filers can expect the draft instructions to be published soon, followed by a 30-day comment period after posting in the Federal Register.

In late June, the IRS announced final regulations on reporting requirements for custodial brokers concerning digital assets, signaling the forthcoming release of an updated form.

What do you think?

• Do you believe the new Form 1099-DA will simplify reporting of digital asset transactions?
• Should the IRS implement additional measures to address the complexities of digital assets in the tax system?
• Are you concerned about the implications of increased transparency in digital asset reporting for taxpayers?