Digital Chamber Criticizes IRS Crypto Tax Form for Privacy Concerns

The Digital Chamber of Commerce, a major blockchain industry group, has criticized the IRS's proposed Form 1099-DA for requesting excessive information about taxpayers' cryptocurrency transactions. They believe that the form's requirements infringe on taxpayer privacy and could lead to errors in tax reporting. The Chamber suggests that the form only require basic information for tax reporting, while additional details should be retained by brokers for IRS examinations.

They also raised concerns about the form's request for sensitive information like transaction IDs and digital asset addresses, arguing that this could infringe on privacy and should only be collected in cases of suspected criminal activity.

The Chamber also proposes adding a field to the form for brokers to indicate if a digital asset has a different tax rate, such as NFTs taxed as collectibles, to ensure accurate reporting. They recommend the IRS release specific instructions for brokers before finalizing the form to ensure accuracy. This feedback is part of the ongoing debate about the IRS's new tax reporting requirements for crypto transactions.