IRS Revises Crypto Tax Tables, Will Remove Wallet Address Requirements

2024/08/12 06:06

The U.S. tax authorities have introduced a revised tax form for crypto investors, aimed at simplifying the filing process for digital asset holders. The draft form, known as the 1099-DA, was released by the IRS on Friday.

It seeks to provide greater "ease and clarity" to tax filers with crypto investments, particularly by omitting previous requirements that raised privacy concerns among crypto enthusiasts.

Key Changes to the Form

One of the most notable changes in the 1099-DA is the removal of the need to report crypto wallet addresses, transaction IDs, and specific transaction times for the relevant tax year. Additionally, crypto brokers no longer need to specify their broker type.

These changes are expected to alleviate some of the privacy concerns that were associated with the earlier versions of the form.

Expert Concerns

Despite these revisions, industry experts remain cautious. Andrew Rossow, CEO and attorney at AR Media Consulting, believes that while the changes address some issues, the underlying complexities of crypto tax compliance remain. He points out that the IRS's focus on mainstream exchanges like Coinbase and Kraken overlooks the growing DeFi sector, which operates on different principles. This focus could potentially hinder innovation within the crypto industry.

Risks of Increased Data Collection

Rossow also warns that the increased collection of financial data by the government could lead to unintended risks, including potential data breaches and identity theft. The concern is that while the revised form might simplify some aspects of tax filing, it could also introduce new challenges and costs for crypto businesses.

Public Feedback and Uncertainty

The IRS first unveiled the draft 1099-DA form in April 2024 and has now given the public 30 days to provide feedback on the latest version. However, the timeline for the final release of the form remains unclear. It is anticipated that the 1099-DA will be used for the 2025 tax year, but no official date has been set.

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IRS Revises Crypto Tax Tables, Will Remove Wallet Address Requirements

Key Changes to the Form

Expert Concerns

Risks of Increased Data Collection

Public Feedback and Uncertainty

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