Discover how Sovos can ensure effortless 1099-DA compliance with automation, accuracy, and seamless integrations—reduce risk, streamline operations, and build trust with a proven solution.
Sovos can help you:
Find out why Sovos is the best solution for your digital asset reporting needs
Sovos bridges the gap between traditional and digital asset brokerages by centralizing 1099 and withholding obligations – including 1099-DA – into a single, streamlined platform. Gain consistency, scalability, and efficiency across all asset classes and reporting requirements.
With IRS requirements driving transaction-level reporting, Sovos processes over 1 million digital asset transactions per minute—including crypto, NFTs, and stablecoins—so you can meet deadlines without delays or bottlenecks.
Provide recipients with a clear, consolidated tax statement that includes all transactions and form types. Sovos solutions integrate traditional and digital asset tax reporting—including 1099-B, 1099-DA, 1099-DIV, 1099-INT, 1099-MISC, 1099-OID and 1099-PATR—into a single statement delivered via mail or electronically.
As an early adopter of IRIS, the IRS’ new 1099 filing system, Sovos ensures seamless, compliant application-to-application filings. With 22% of IRIS filings handled through Sovos, we offer proven expertise in filing 1099 returns through the new system.
Generating a 1099-DA form requires accurate W-8/W-9 management, withholding determination, transaction tracking and cost basis calculations. Sovos partners with industry leaders to ensure a seamless flow of information, but we also integrate with existing or chosen partners—giving you the flexibility to build the best tax compliance solution with the top providers in the market.
Sovos monitors all direct state reporting rules, thresholds, and deadlines—so you don’t have to. Our built-in compliance ensures your filings meet evolving state regulations, even with last-minute changes.
The IRS’s final regulations on digital asset reporting mark a turning point in how crypto brokers, digital asset platforms and taxpayers report transactions. With authorities expecting to process over 8 billion 1099-DA forms annually – more than double current IRS intake – organizations must ensure they have a structured and scalable tax compliance strategy in place.
Packed with expert insights from Sovos’ Wendy Walker, VP of Regulatory Affairs, this guide covers everything you need to know from informational reporting requirements to best practices for compliance.
Crypto investors will now be receiving a Form 1099-DA from their digital asset broker. Reporting will be required by the IRS beginning in January 2026 for tax year 2025 and will encompass transactions that include digital assets such as cryptocurrency and non-fungible tokens (NFTs).
Form 1099-DA is designed to improve tax compliance by ensuring accurate reporting of digital asset transactions. As cryptocurrency, NFTs, and other digital assets grow, many transactions go unreported, contributing to a growing tax gap. 1099-DA helps close this tax gap by capturing missing data and aligning digital asset reporting requirements with traditional asset reporting.
Form 1099-DA provides standardized methodology for reporting cryptocurrency transactions. Requiring digital asset brokers to issue the Form 1099-DA ensures that the IRS can secure more accurate information regarding cryptocurrency transactions. This greatly reduces the potential for fraud and nonpayment of taxes.
Anyone engaging in transactions using virtual assets will be impacted and will need to be issued a Form 1099-DA. Examples of this include entities or individual persons who buy, sell or trade cryptocurrency and businesses who accept cryptocurrency as a form of payment for goods or services.
Prior to January 1099-K forms were issued to those who were paid in cryptocurrency by the payment platform. The gross amount of crypto payments for the tax year were calculated and stated on the 1099-K. Then, individual taxpayers would be responsible for self-reporting this income on their own Form 1040.
The Instructions for Form 1099-DA were released on January 8, 2025, and like other instructions for 10-Series forms, contains complex information detailing how each box must be filled out, including some rules and exceptions. Along with information commonly required for 10-series reporting like federal tax withheld and state-specific information, the 1099-DA requires a complex array of data from cost basis and information about gains and losses, to confirmation of whether a digital asset is categorized as a non-covered security. This level of detail reflects the complex nature of the digital asset marketplace and the required information necessary to provide the IRS with a comprehensive and detailed glimpse into digital asset handling by an individual or entity over the course of a calendar year. To put it briefly, the 1099-DA is likely the most complicated representation of 10-series reporting to-date, but is much simpler than its previous iterations in draft form.
Prior to the release of the current form by the IRS, the form went through multiple draft revisions. The original draft was complicated and required information about the time the digital assets were acquired and disposed of. The reasoning behind the original requirements was that digital assets can change value very quickly and that the timing of the acquisition or disposition mattered significantly. Over time the form has been edited and pared down, due in part to the final regulations surrounding digital asset reporting published during the summer of 2024. While the final version of the form is somewhat simpler and refined than its draft versions, it still represents a complex reporting vehicle that filers must become familiar with quickly to ensure they maintain the proper data points for reporting purposes.
The regulations which were created in conjunction with the development of this form received over 30,000 comments during the comment period, many of which were about the complicated nature of the regulations themselves which would in turn would require a complicated form. The IRS considered many of the comments and integrated some of them into the final regulations which were significantly simplified from the original version. The primary focus of the regulations was to treat digital assets like other traded assets, providing cost basis and sale price information to allow for more clear understanding of the value of the assets for tax purposes.