IRS plans digital-only tax forms for crypto

TLDR

The IRS is moving toward digital-only tax forms for crypto, changing how exchanges deliver Form 1099-DA rather than what gets reported.

1. The proposal would let exchanges deliver Form 1099-DA for digital asset trades only electronically and potentially close paper options for users who do not consent.
2. From 2025, US platforms must send 1099-DA on crypto trades, with cost-basis reporting layering in later, which industry critics say will burden small and stablecoin transactions.
3. The change is still in draft form, so the key things to watch are the final rule, how big exchanges implement consent, and how this fits into broader global crypto tax reporting rules.

Deep Dive

1. What The IRS Is Planning

US tax authorities have proposed rules that would allow crypto brokers to require electronic-only delivery of Form 1099-DA, the new form for reporting digital asset trades, starting as early as the 2027 tax season. Under the draft, customers typically consent during onboarding with an in-app agreement, cannot revert to paper while the account is open, and would receive forms via email or an online document center, with access required until about October 15 of the following year and archives retained for seven years. If an email fails, the broker would mail a notice, but not the full form, according to one detailed summary of the proposal.

Importantly, this does not change what gets reported to the IRS, only how the form is delivered. For 2025 transactions, brokers must send the IRS and users Form 1099-DA reporting gross proceeds from digital asset sales, with cost basis and gains or losses added for some assets from 2026 onward.

2. How This Hits Crypto Users

For US users of centralized exchanges, this makes crypto tax reporting look much more like stocks: the IRS will automatically receive standardized data tied to your identity, reducing room for unreported trading. The IRS has highlighted that automated systems already flagged over $6.6 billion in potential underreported income in a single year and estimates that up to 75% of digital asset users have not fully complied, which is a key motivation for tightening digital reporting.

However, exchanges and industry voices are flagging real friction. Coinbase, which is now sending millions of 1099-DA forms, argues that the rules force reporting of tiny trades, stablecoin movements, and even small gas fees, cluttering filings for retail users with little taxable income while still requiring people to calculate their own cost basis in the early years.

3. What To Watch Next

These rules are still proposed, with a public comment period and potential adjustments before they become binding. Watch for whether the final version softens treatment of very small transactions or clarifies how consent and account closures will work in practice.

At a higher level, this move lines up with global efforts like the OECDs Crypto-Asset Reporting Framework and the EUs DAC8 directive, which also push standardized, largely digital tax reporting for crypto. Over the next few years, the direction of travel is toward crypto being reported and audited like any other financial asset, with less reliance on self-disclosure alone.

Conclusion

The IRSs digital-only approach to crypto tax forms is about modernizing the plumbing of tax reporting and closing compliance gaps, not introducing new taxes. For crypto users, it means treating exchange accounts more like brokerage accounts, with standardized digital forms, less practical anonymity, and a stronger incentive to keep accurate records and understand how your trades show up on your tax forms.