The Chamber of Digital Commerce, a prominent trade association in the blockchain industry, has submitted its feedback on the United States Internal Revenue Service’s (IRS) proposed Form 1099-DA, which is designed for reporting digital asset transactions.
In its detailed response, the chamber emphasizes the importance of simplifying the form to make it easier for brokers dealing with digital assets like cryptocurrencies to use. It also raises concerns about privacy and suggests that only the necessary information for reporting digital asset transactions should be requested from taxpayers.
The chamber criticizes the draft form for requesting excessive information and argues that the final form should only require the information necessary for basic tax reporting. Additional details should be retained by brokers for use during specific IRS examinations.
The blockchain advocacy group also expresses concerns about the form’s request for sensitive information such as transaction IDs and digital asset addresses. It believes that collecting such details could compromise taxpayer privacy and suggests that they should only be collected if there is suspicion of criminal activity.
The feedback highlights that the draft form implies the need for specific broker instructions, which were not included. The chamber advises the IRS to release the instructions for public review before finalizing the form to ensure that brokers can accurately complete it.
Additionally, the chamber suggests that the form should allow brokers to indicate if a digital asset is subject to a different tax rate, such as non-fungible tokens that might be treated as collectibles and taxed at a higher rate. This would help prevent errors in IRS processing and ensure accurate tax reporting.
The draft form was released by the IRS on April 18, and the chamber’s input follows its earlier comments on related proposed regulations submitted in November 2023.
According to the draft form, brokers, including kiosk operators, digital asset payment processors, hosted wallet providers, unhosted wallet providers, and others, will prepare Form 1099-DA for every customer who sells or exchanges digital assets.
After announcing the proposed reporting requirements, the crypto community provided feedback. The Blockchain Association criticized the rule for its “fundamental misunderstandings about the nature of digital assets and decentralized technology.”
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