April

The U.S. Internal Revenue Service (IRS) has once again turned its attention to the burgeoning digital asset market. This time, it has updated the draft form, aimed at simplifying the <a href="https://thecoinrise.com/irs-prepares-for-surge-in-crypto-tax-crime-cases/">reporting of cryptocurrency transactions for taxpayers</a>. 
On August 8, the IRS unveiled a new version of Form 1099-DA, officially titled “Digital Asset Proceeds From Broker Transactions.” This form, set to be used by U.S. taxpayers for the 2025 tax year, aims to make it easier to report crypto transactions by the filing deadline in April 2026. 
<h2 id="span-style-font-weight-400-a-series-of-changes-span">A Series of Changes</h2> 
The latest draft of Form 1099-DA reflects a series of changes following industry feedback. This new draft has removed the box asking taxpayers to identify the “broker type” for their digital asset transactions. The IRS also removed the requirement to report the precise time of day a transaction occurred, opting instead to ask only for the date. 
Additionally, the form no longer requires taxpayers to include wallet addresses and transaction IDs. These revisions mark a significant departure from the previous draft released in April, which had been criticized for being overly burdensome. 
IRS Commissioner Danny Werfel <a href="https://www.irs.gov/newsroom/irs-updates-draft-version-of-form-1099-da-digital-asset-proceeds-from-broker-transactions-requests-comments-on-form-planned-for-2025">stated</a> that the updated form is designed to “provide more clarity for taxpayers and give them another tool to help them accurately report their digital asset transactions.” 
<h3 id="span-style-font-weight-400-background-span">Background</h3> 
The journey to this latest draft of Form 1099-DA began in August of last year when the IRS proposed new tax reporting rules aimed at treating crypto brokers similarly to traditional brokers who handle stocks and bonds. The original draft of the form was part of a broader effort to close the tax gap by ensuring that cryptocurrency transactions are accurately reported. 
These rules require entities defined as brokers to file 1099-DA forms for certain cryptocurrency transactions on behalf of their customers. Notably, decentralized exchanges and self-custody wallets were exempted from these requirements in the final draft of the reporting regulations released in June. 
The latest revision appears to address concerns raised by industry stakeholders, who argued that the initial version of the form was too complex and demanded excessive data reporting. For instance, in June, blockchain development firm <a href="https://thecoinrise.com/consensys-urges-irs-to-delay-new-crypto-tax-reporting-regulations/">Consensys requested that the agency delay</a> the implementation of the last updated tax regulations, citing concerns about the potential impact on the industry.&nbsp; 
<h2 id="span-style-font-weight-400-industry-reacts-span">Industry Reacts</h2> 
Drew Hinkes, an attorney with K&amp;L Gates, <a href="https://x.com/propelforward/status/1821941673426878501">took</a> to social media platform X to voice his approval of the changes. He described the latest version of Form 1099-DA as “massively improved,” noting that it is “less burdensome” and requires “considerably less” data reporting. 
Similarly, Ji Kim, Chief Legal and Policy Officer for the Crypto Council for Innovation (CCI), <a href="https://x.com/_jikim/status/1821914009911652533">echoed</a> these sentiments, suggesting that the revisions were “welcome changes” that the CCI and the broader industry had advocated for. 
The IRS has invited the public to submit comments on the draft form within 30 days, indicating that further tweaks may be made before the form is finalized. This open invitation for feedback reflects the agency’s awareness of the crypto industry. 
Earlier this month, the <a href="https://thecoinrise.com/irs-claims-crypto-staking-rewards-are-taxable/">IRS was reported of announcing that U.S. crypto investors must declare crypto staking awards</a> as gross income in the year they are earned. 
The post <a href="https://thecoinrise.com/irs-updates-draft-form-for-reporting-crypto-transactions-industry-reacts/">IRS Updates Draft Form for Reporting Crypto Transactions, Industry Reacts</a> appeared first on <a href="https://thecoinrise.com">TheCoinrise.com</a>.

IRS Updates Draft Form for Reporting Crypto Transactions, Industry Reacts

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