The US Internal Revenue Service (IRS) is proposing to mandate electronic delivery of tax forms to cryptocurrency exchange users. This shift would eliminate the current requirement for exchanges to provide paper copies of Form 1099-DA upon request.
Under the proposed rules, brokers will be permitted to end relationships with clients who refuse electronic tax form delivery. Furthermore, users will be barred from retroactively revoking consent for electronic forms.
The IRS requires crypto brokers and platforms to report user proceeds from each transaction and provide Form 1099-DA. However, tracking cost basis remains the investor's responsibility for the 2025 tax year. Reporting will include customer identifying information and gross transaction proceeds.
Approximately 55 million Americans hold digital assets. Tax compliance is a significant concern, with many users seeking more education on digital asset tax implications.
This proposal follows the earlier revocation of a controversial rule that would have classified decentralized finance (DeFi) platforms as broker-dealers subject to tax reporting. The crypto industry had expressed concerns about potential KYC reporting requirements for DeFi.