IRS Simplifies Crypto Reporting with Updated Tax Form Draft

IRS Simplifies Crypto Reporting with Updated Tax Form Draft

The Internal Revenue Service (IRS) has released an updated draft of Form 1099-DA, designed to streamline the reporting of cryptocurrency transactions. This latest version simplifies the reporting process, addressing privacy concerns and reducing the burden on investors. The initial draft released in April had required brokers to include investors' wallet addresses and transaction IDs, raising privacy concerns. The updated form eliminates this requirement, focusing instead on essential transaction information. It also simplifies the reporting format for transaction dates, requiring only the date instead of specific transaction times. Moreover, the updated draft removes the section for selecting the type of broker, such as kiosk operators, cryptocurrency payment processors, and wallet service providers. This simplification aims to make the reporting process more straightforward and consistent. Drew Hinkes, an attorney specializing in cryptocurrency matters, commented, "This is a vast improvement on the form. It takes away the burden of having to report very specific data." This updated draft reflects the IRS's ongoing efforts to address the growing adoption of cryptocurrency and provide clear guidance to investors and brokers. It simplifies the reporting process while maintaining the necessary information for tax compliance.