Digital Assets Tax Form Drafted by IRS Sparks Privacy and Security Debate, Expert Voices Concerns

The U.S. Internal Revenue Service (IRS) has unveiled a draft tax Form 1099-DA for reporting digital asset proceeds from broker transactions, set to be effective for tax filings in 2025. 

This form mandates brokers, including unhosted wallet providers, to report digital asset dispositions to both taxpayers and the IRS. Notably, a crypto tax expert has expressed concerns about potential privacy and security risks associated with the IRS collecting specific data points, such as wallet addresses. Shehan Chandrasekera from Cointracker emphasized the form’s inclusion of data like sale transaction IDs, digital asset addresses, and transfer-related details, highlighting potential privacy implications. 

He also noted the IRS’s indication of including unhosted wallets under the broker definition, indicating forthcoming changes in how users interact with crypto platforms and decentralized finance (DeFi).

Clever Robot News Desk 22^nd April 2024