IRS Crafting Digital Asset Payment Reporting Form

The Internal Revenue Service is developing a payment reporting form for digital asset transactions, the deputy chief of the agency's Criminal Investigation division said Friday.

The IRS is working on the Form 1099-DA, which exchanges and other participants in cryptocurrency transactions will have to fill out on behalf of customers or for "know your customer" purposes, James Robnett said during the annual New York University School of Professional Studies Tax Controversy Forum, held in New York City and online.

Scott Irick, examination director in the agency's Small Business/Self-Employed division, said during a separate panel at the same conference Friday that his team is leading the development of the form.

Irick said the agency is following a service-wide strategy regarding enforcement of digital assets and currencies.

"We're arming our examiners, providing them with the training, looking to external vendors for the tools that will help not only trace but establish basis on all those transactions," he said. "And we have any number of work streams that are currently out in exam related to digital assets, digital currency."

News of the payment reporting form being developed follows a general expansion of cryptocurrency reporting requirements. The Form 1040 includes a checkbox for taxpayers to indicate whether they took part in cryptocurrency transactions.

The Infrastructure Investment and Jobs Act, which President Joe Biden signed in November, requires more stringent reporting of cryptocurrency transactions to the IRS.

That law "clarifies tax information reporting for digital asset transactions," the IRS told Law360 in a statement. "However, no implementation date has been determined."

Agency officials have previously highlighted cryptocurrency as an enforcement priority. Ryan Korner, special agent in charge of the Criminal Investigation division's Los Angeles field office, did so during a 2021 virtual conference. Internal Revenue Commissioner Chuck Rettig also called unreported cryptocurrency gains an enforcement priority during a 2019 conference.

Published on June 28, 2022