TechFlow reports that on March 8, according to Interactivecrypto, Coinbase stated that the U.S. Internal Revenue Service’s (IRS) newly introduced digital asset tax reporting form, Form 1099-DA, contains overly burdensome rules that could impose unnecessary administrative burdens on a large number of cryptocurrency holders. Lawrence Zlatkin, Coinbase’s Vice President of Tax, noted that the new rules require reporting of stablecoin transactions and network gas fees—transactions involving trivial amounts. Since stablecoins’ prices remain largely stable and gas fees are typically just a few dollars or even less, requiring such information to be reported may lead to “over-reporting,” further complicating the tax system.
It is understood that Coinbase is currently issuing Form 1099-DA to millions of U.S. users. Under this regime, trading platforms must report users’ digital asset transaction activity to the IRS and simultaneously provide users with copies for their own profit-and-loss reporting. However, for this year’s filing season, Coinbase will only report gross proceeds from digital asset sales to the IRS—not cost basis. Users will need to calculate their actual taxable gains themselves, potentially causing confusion for some investors. Coinbase plans to begin calculating cost basis for users starting with the next tax year to simplify the reporting process.
