Coinbase, a leading cryptocurrency exchange, is pushing back against new U.S. tax-reporting rules for digital assets, deeming them overly complicated and burdensome for crypto holders. The company's tax experts warn that the new IRS 1099-DA forms, intended to align crypto reporting with traditional finance, are creating significant administrative overhead.
Lawrence Zlatkin, Coinbase's VP of Tax, stated that the requirement to report minuscule transactions, including stablecoin holdings and small network fees (gas), is unnecessary and detracts from the tax system's core purpose. He questioned the value of focusing national efforts on such small-scale activity.
The current system requires Coinbase to report gross proceeds from digital asset sales to the IRS, leaving the onus on traders to track their acquisition costs and actual tax basis. Coinbase plans to offer cost basis calculation for customers starting next year. This lack of clarity, particularly for individuals new to asset reporting, is expected to cause confusion.
Zlatkin highlighted the issue of reporting stablecoin transactions, noting that they do not generate income. He also pointed to gas fees, often amounting to less than a dollar, as another example of reporting clutter that doesn't align with collecting revenue from actual income-generating activities.
Ian Unger, Coinbase's Director of Tax Reporting Information, noted that unlike traditional assets like stocks, crypto transactions currently lack integrated transfer statements for cost basis, contributing to ongoing confusion.