IRS unveils preliminary version of 2025 form for US taxpayers to report digital assets

The Internal Revenue Service (IRS) in the United States has introduced a preliminary draft of Form 1099-DA titled “Digital Asset Proceeds from Broker Transactions” for disclosing earnings from digital asset dealings. This form is slated for deployment in 2025 to facilitate reporting in 2026. Brokers, encompassing kiosk operators, digital asset payment processors, hosted and unhosted wallet providers, among others, will be responsible for completing Form 1099-DA for each client engaged in the sale or exchange of digital assets.

The form solicits information such as token codes, wallet addresses, and blockchain transaction details. As outlined in the proposal from August 2023, cryptocurrencies, nonfungible tokens, and stablecoins fall within the scope of reportable assets. Following the announcement of these reporting guidelines, the cryptocurrency community expressed its opinions. The Blockchain Association criticized the rule for its apparent misconceptions regarding digital assets and decentralized technologies. Additionally, tax professionals have shared their insights online.

Ledgible, a crypto tax and accounting service, anticipates challenges in reporting decentralized finance transactions due to the absence of intermediaries to fulfill these obligations. Moreover, the new rule is expected to impose a substantial administrative burden on brokers who handle a high volume of transactions. Taxpayers who may have underreported their crypto earnings in previous years could face repercussions when filing their taxes in 2025. The IRS is open to receiving feedback on the draft form to refine the reporting process.