The Chamber of Digital Commerce, a leading blockchain industry trade association, has provided feedback on the U.S. Internal Revenue Service’s (IRS) proposed Form 1099-DA, aimed at reporting digital asset transactions.
The chamber’s response emphasizes the need to simplify the form, making it easier for brokers handling digital assets like cryptocurrencies to use.
It also underscores privacy concerns, advocating for the request of only essential information for reporting purposes.
The chamber criticized the draft form for requesting excessive information, recommending that the final version require only the basic details necessary for tax reporting.
They suggest that brokers should retain additional information for specific IRS examinations only.
Moreover, the chamber raised concerns about the form’s request for sensitive information, such as transaction IDs and digital asset addresses.
They argue that these details could infringe on taxpayer privacy and should only be collected if there is a suspicion of criminal activity.
The feedback also notes that the draft form implies the necessity for specific broker instructions, which were not included.
The chamber advises the IRS to release these instructions for public review before finalizing the form to ensure brokers can accurately complete it.
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Additionally, the chamber suggested that the form should allow brokers to indicate if a digital asset is subject to a different tax rate, such as non-fungible tokens (NFTs) that might be treated as collectibles and taxed at a higher rate.
This, they state, would help prevent errors in IRS processing and ensure accurate tax reporting.
The IRS released the draft form on April 18 and invited comments.
The chamber’s input follows its earlier feedback on related proposed regulations submitted in November 2023.
According to the draft form, brokers will prepare Form 1099-DA for each customer who sells or exchanges digital assets.
Brokers include kiosk operators, digital asset payment processors, hosted wallet providers, unhosted wallet providers, and others.
Following the announcement of the proposed reporting requirements, the crypto community provided feedback.
The Blockchain Association stated that the rule contains “fundamental misunderstandings about the nature of digital assets and decentralized technology.”
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