Digital Asset 1099-DA Statements: Proposed IRS Rules Make Electronic Reporting Easier

The world of digital assets — from cryptocurrency and stablecoins to NFTs — is evolving rapidly, and so are the tax rules that govern them. Recently, the Department of the Treasury and the IRS issued proposed regulations that could make it significantly easier for brokers to provide Form 1099-DA, Digital Asset Proceeds From Broker Transactions, electronically rather than on paper.

At Velin & Associates, Inc., we want our clients — whether you’re a content creator, Shopify store owner, dentist, doctor, or high-net-worth individual investing in digital assets — to understand what these changes could mean for your tax reporting and planning in the coming years.

Why These Proposed Rules Matter

Currently, digital asset brokers must provide paper 1099-DA forms to any customer who does not explicitly consent to receive them electronically. With the growing popularity of digital transactions, mailing paper statements can be burdensome, slow, and inefficient — especially for clients who execute hundreds or thousands of trades a year.

The proposed rules aim to reduce this burden by allowing brokers to:

• Furnish 1099-DA statements electronically without offering paper copies as an alternative.
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• Provide electronic statements without requiring customers to have the ability to withdraw consent once given.
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• Maintain clear notice and access requirements to ensure clients can review their statements.

This change recognizes that digital asset transactions are inherently electronic, making paper statements increasingly unnecessary.

Who Is Affected

Digital asset brokers — including cryptocurrency exchanges, NFT marketplaces, and other platforms facilitating the sale, exchange, or transfer of digital assets — will benefit most from these proposed rules.

Investors and traders — individuals who hold, trade, or sell digital assets — will also be impacted, as they may begin receiving 1099-DA statements exclusively in electronic format starting 2027.

Digital assets subject to these rules include:

• Convertible virtual currencies (e.g., Bitcoin, Ethereum)

• Stablecoins

• Non-fungible tokens (NFTs)

• Other IRS-recognized digital property

What This Means for Your Tax Planning

1. Faster Access to Statements

Electronic delivery allows you to receive 1099-DA forms as soon as your broker generates them, rather than waiting for mail. This enables more timely tax reporting and planning.

2. Centralized Record-Keeping

Electronic statements are easier to download, organize, and integrate with accounting software or spreadsheet records — especially important for high-frequency traders.

3. Tax Accuracy and Compliance

Electronic 1099-DA statements help reduce errors associated with paper forms and ensure you have the correct transaction data for tax reporting. This is crucial to avoiding IRS notices or audits related to digital asset transactions.

4. Planning Opportunities for High-Volume Traders

If you trade frequently or hold multiple digital assets, receiving consolidated electronic statements simplifies tax calculations, including:

• Tracking capital gains and losses

• Calculating short-term vs. long-term gains

• Ensuring cost basis reporting is accurate

Example:
A freelance digital artist selling NFTs and receiving payments in Ethereum executes dozens of transactions per month. Under current rules, they might receive multiple paper 1099-DA statements from different platforms, making record-keeping cumbersome. With the proposed electronic reporting rules, all statements could be accessed online, downloaded in a single format, and imported directly into accounting software for accurate tax reporting.

What Brokers Must Do

Although the proposed rules provide flexibility, brokers still have responsibilities, including:

• Providing clear electronic notice that an important tax document has been furnished
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• Ensuring customers have ongoing access to their 1099-DA forms
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• Maintaining data security and compliance with IRS electronic reporting standards

Next Steps

• Comment Period: The Treasury and IRS are requesting public comments via Notice 2026-4 regarding electronic furnishing of 1099-B and 1099-DA forms. Stakeholders can submit feedback to influence final regulations.
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• Effective Date: Brokers can begin following the proposed rules for 1099-DA statements issued on or after January 1, 2027.

How Velin & Associates, Inc. Can Help

If you invest in digital assets, these changes make it more important than ever to:

• Keep accurate, up-to-date transaction records

• Confirm receipt of 1099-DA statements from all platforms

• Plan for potential capital gains or losses before tax filing

• Ensure compliance with IRS reporting requirements for high-frequency digital asset trades

Our team can help you:

• Interpret your electronic 1099-DA statements

• Integrate digital asset data with your accounting systems

• Strategically plan for taxes related to cryptocurrency, NFTs, and other digital assets

• Ensure compliance while optimizing your tax situation

Example:
A healthcare professional accepting Bitcoin payments for elective procedures received electronic 1099-DA statements from each payment platform. By working with Velin & Associates, Inc., they consolidated all statements, calculated capital gains accurately, and avoided penalties or underpayment fees while taking full advantage of allowable deductions.

Digital assets present exciting opportunities — but also unique tax challenges. With these new IRS proposals, electronic reporting will streamline the process for both brokers and investors, but careful planning is essential.

For more information about our tax planning services, contact us today: visit our website.

Velin & Associates, Inc

8159 Santa Monica Blvd STE 198/200 West Hollywood, CA 90046
323-902-1000
dmitriy@losangelescpa.org

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