The Next Crypto Crisis will Arrive in Americans’ Mailboxes | Opinion
Summary
The IRS is starting a new system to report cryptocurrency transactions using Form 1099-DA, but it often collects incomplete information. This could cause ordinary Americans to receive tax bills they do not actually owe because the IRS cannot always see the full history of their digital asset activity.Key Facts
- The IRS requires crypto exchanges to report transactions through Form 1099-DA, starting with gross sales amounts.
- Full cost-basis reporting (showing purchase price and value) will be required starting in 2026.
- The IRS expects about 8 billion 1099-DA forms to be filed every year by 2027.
- Digital crypto assets can be moved between wallets and exchanges, which may erase important transaction details.
- Without complete records, the IRS may think taxpayers have gains when they actually have losses.
- Tax software depends on accurate data but cannot fill in missing transaction details.
- Many investors try to follow tax rules but face challenges because their records are incomplete.
- Unlike stock brokerage systems, crypto platforms are not yet equipped to share detailed, linked cost information automatically.
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