The proposal by the U.S. tax agency would eliminate the requirement for exchanges to provide users with paper copies of Form 1099-DA.
The United States Internal Revenue Service (IRS) has proposed new rules to make the electronic delivery of tax forms mandatory for exchange users. The proposal amends current regulations that require exchanges to provide paper copies of Form 1099-DA upon user request.
Form 1099-DA is the IRS tax document used to record cryptocurrency transactions carried out through centralized exchanges or brokers. The proposed new rules would eliminate the requirement to provide the form in paper format and would allow brokers to “terminate” their relationship with existing clients who refuse electronic delivery. The proposal would also prohibit users from retroactively revoking their consent to receive forms in digital format. If adopted, the new rule would take effect on January 1st of the calendar year following the IRS’s publication of the final regulations.
The IRS requires all broker-dealers – that is, platforms that provide crypto services to users, such as exchanges – to report user proceeds for each transaction and to provide Form 1099-DA detailing their transaction history for tax purposes. The agency has specified reporting requirements for brokers: “Brokers required to file these returns must include the customer’s identifying information, such as name and taxpayer identification number (TIN), and other relevant information, including the gross proceeds of the transaction.”
According to the National Cryptocurrency Association (NCA), a crypto industry advocacy group, one in five Americans holds digital assets in the United States, totaling approximately 55 million individuals.
