Survey shows that over half of American crypto holders are concerned about IRS penalties, and the new 1099-DA form has caused widespread confusion

Deep Tide TechFlow News, February 18 — According to CoinDesk, the crypto tax platform Awaken Tax conducted a survey at the end of January this year involving 1,000 U.S. digital asset investors. The results showed that over half of the respondents are concerned about facing penalties from the IRS due to new tax transparency rules.

The new regulation requires crypto exchanges like Coinbase to submit “Digital Asset Broker Transaction Income” forms (Form 1099-DA) to the IRS this week, marking a shift from previous self-reporting methods to an automatic reporting system. The goal of the regulation is to enable the IRS to cross-reference exchange customer data with taxpayers’ declarations by opening up trading data, thereby combating crypto tax evasion.

However, Awaken Tax founder Andrew Duca pointed out that this rule is a “rough tool” created by legislators who have little understanding of the crypto industry. The core issue is that exchanges like Coinbase can only report sales gains from digital assets but cannot provide the tax basis information necessary to calculate capital gains or losses (i.e., purchase price plus acquisition costs). For example, if a user transfers Bitcoin stored in a cold wallet to Coinbase for sale, Coinbase cannot know the original purchase price, resulting in incomplete information on the submitted forms to the IRS. Duca stated that the responsibility to fill in this gap ultimately falls on the holders, who must supplement the relevant information themselves using the IRS’s updated Form 8949.

Duca also noted that the current tax compliance rate for crypto assets is very low, with less than 20% of holders reporting according to regulations. The new regulation aims to significantly increase this percentage within a year.