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Source: TAXDAO
The U.S. Taxation Agency (IRS) released the first tax statement draft for digital asset transactions on April 19, a draft of digital asset transactions.Digital assets of transactions.This article combed and interpreted the content of the form.
1 1099-DA Overview
For a long time, the IRS has always regarded cryptocurrencies as the primary source of uncomfortable revenue.The survey shows that a considerable number of cryptocurrency investors in the United States have unsatisfactory phenomena in tax reports. The new report requires the ability to greatly improve the ability of the U.S. Taxation Agency to arrest cryptocurrency tax evaders.Cryptocurrencies are one of the fastest growing industries in the world, but there are currently no tax sheet for reporting cryptocurrency income or capital gains and losses.The 1099-DA form is a new tax table specifically for digital assets.
Most cryptocurrency traders encountered problems when using the tax sheet provided by cryptocurrency exchanges because they were not suitable for cryptocurrency reports-1099-DA aimed at solving this problem.The U.S. Taxation Administration hopes to make cryptocrete information easier to access and ensure that all cryptocurrency traders report their income and losses.
2 Who is responsible for applying for Form 1099-DA?
The 1099-DA form is the first tax statement specifically used to collect the identity information and detailed transaction materials from the agent to collect the identity information and detailed transaction information from the agent.Anyone who is regarded as a digital asset agent needs to submit 1099-DA forms to customers and IRS.
IRS’s proposed regulations explain in detail who should be regarded as a broker:
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Central Exchange (such as Coinbase)
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Decentralization exchange (such as Uniswap)
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Wallets allowing users to buy, sell and trading digital assets (such as Metamask)
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Bitcoin ATM machine and other digital asset trading booths
It is worth noting that IRS’s proposed regulations do not consider any of the following people as agents:
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Miners, node operators, or other people who only maintain the blockchain.
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Hardware wallets that do not directly allow users to purchase, sell and trading digital assets (for example, must be connected to the exchange to complete any wallet for such transactions).
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Software developers who indirectly promote digital asset transactions (for example, developing code for companies such as Coinbase).
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Smart contract developers have revenue from their smart contracts, but do not maintain and update the contract for contract developers.
Digital asset agents and those who are regarded as agents will issue 1099-DA forms to investors.In the form, a transaction that reported on capital gains or capital losses, as well as transactions that exchanged digital assets into another digital asset.Brokers must use the 1099-DA form to report the income (or loss) and cost foundation of the disposal of digital assets to the taxpayer and IRS.1099-DA requires agents to specifically explain their types, including self-service terminal operators, digital asset payment processors, hosting/non-hosting wallet suppliers or other digital assets.
3 Declaration requirements
3.1 Declaration method
The United States adopts a voluntary tax compliance system, and the taxpayer is responsible for computing and declaration of its own taxes.Taxpayers need to report two types of information: information reported and information reported by third -party reports.
The US domestic tax bureau checks the amount reported by the third party with the amount reported by the taxpayer.Third-party tax forms include W-2, 1099, 1098, etc.The taxpayer needs to report any income, expenditure or deduction items that do not report in the third -party form.These two reports are completely independent.At present, cryptocurrency tax computing in the United States mainly adopts self-reporting methods, but 1099-DA and its report stipulate that some information that requires the exchange of taxpayers to report taxpayer cryptocurrency transactions, that is, third-party report forms.
3.2 Declaration content
Table 1099-DA will report information about the sale or disposal of digital assets, including the narrow cryptocurrency (Bitcoin, Ethereum, etc.), NFT and stable coins.
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When to get digital assets (acquisition date)
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For this, how much fees have been paid (cost foundation)
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Sale or exchange time (sell or disposal date)
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The disposal income obtained in the sale or exchange
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Total income or total loss (disposal income reduction cost foundation)
The form will apply to sales after January 1, 2025, so taxpayers may receive the first 1099-DA form in January 2026.
3.3 Specific application details
In the draft 1099-DA form published by IRS, the following reporting information is mainly included:
1. Digital asset broker identity identification (TIN).In order to protect the privacy of taxpayers, only TIN, (SSN), personal taxpayer recognition number (ITIN), personal tax return identification number (ATIN) or employer recognition number (EIN) are displayed in 1099-DA, the last fournumber.
2. CUSIP number.Display CUSIP (unified security identification program committee) number or other applicable identification numbers, which are suitable for disposal digital assets.
3. Digital asset code, name of digital assets.
4. The number of digital asset units sold, exchange or disposed of in other ways in transactions.
5. Trading time.
6. Total transaction income.
7. The cost basis of selling, exchanging or other digital assets.
8. Digital assets should have a market discount amount.
9. Involved in digital assets (if these assets are deemed to be taxparted as stocks or securities), they are not deductible in the carrier.
10. Back up the pre -deduction.If the taxpayer does not provide the correct TIN or does not declare interest or dividend income, you may need to pay the backup tax.
11. Short -term capital gains and losses and long -term capital gains and losses.
12. Non -cash income, that is, non -cash returns such as goods and services obtained in the transaction.
14. Sales/transfer to transaction ID (TXID), sales/transfer to digital asset wallet address, and the number of sales/transfer to digital asset units.
15. State/local income tax information.
4 The impact of the risk and the impact on the taxpayer
The agent who has not been submitted to the 1099-DA form may face a fine of $ 3,532,500 each year.Delicate on the tax declaration form may lead to criminal charges, severe economic punishment, and even jail.
Table 1099-DA represents an important change in the US government in terms of tax supervision.By requiring agents to disclose investors’ cryptocurrency transactions, the landing of 1099-DA marks that the declaration of encrypted transaction tax declaration transitions from a pure self-report to self-reporting to self-reporting and third-party reports.
On the one hand, the introduction of the 1099-DA form shows that the tightening of supervision reflects the main source of the unsurmonition revenue of IRS closely paying attention to cryptocurrencies.IRS has the ability to track and punish tax evasion by taking measures to take measures against agents.
On the other hand, the landing of 1099-DA has brought considerable challenges to the cryptocurrency trading environment.This form requires a broker to report investors’ wallet address, number of transactions, etc., which is a big impact on the anonymity of encrypted transactions.In addition, the scope of the report is not limited to cryptocurrency exchanges.Table 1099-DA is also applicable to platforms and facilities such as decentralized exchanges and Bitcoin ATM-as long as they meet the definition of agents under the new regulations.This brings more complicated compliance issues to the trading platform.
In short, the 1099-DA may change the operating dynamics of the cryptocurrency market and also reflect the stricter regulatory trend of the industry.IRS’s measures are consistent with the efforts of global efforts to supervise financial transactions and reduce the efforts of financial crimes such as tax evasion and money laundering.
