The First Form 1099‑DA Reporting Season Is Complete: What Changes Next for Digital Asset Brokers

The IRS’s digital asset information reporting regime has officially cleared its first major milestone. Following the introduction of Form 1099‑DA for transactions beginning January 1, 2025, digital asset brokers have now completed their first reporting season under the final §6045 regulations.

While this initial cycle benefited from broad transitional relief, the compliance landscape is tightening. Backup withholding relief is expected to phase out, certified W‑9 collection requirements are approaching, and the IRS is signaling long‑term expectations through updates to Form W‑9 even as the revised form remains in draft status.

Now is a great time to summarize where things stand today, what changes are coming next, and how firms should be preparing.

The First 1099‑DA Reporting Season: A Transitional Filing Year

The 2025 filing season marked the first time brokers were required to file Form 1099‑DA, Digital Asset Proceeds From Broker Transactions, reporting gross proceeds from customer digital asset sales effected during calendar year 2025.

There was much operational complexity associated with launching an entirely new reporting framework which included issues for firms to handle transaction classification, valuation challenges, incomplete cost‑basis data, and taxpayer identification gaps. With that in mind, the IRS paired the final regulations with transitional relief under Notice 2024‑56, later expanded by Notice 2025‑33.

As a result, brokers filing for 2025 benefited from penalty relief where good‑faith efforts were made, relief from backup withholding obligations, no cost basis requirements, and flexibility in relying on IRS TIN matching instead of fully certified W9s for certain customers. This relief allowed firms to complete their first reporting cycle without immediate exposure to withholding liabilities and associated penalties.

Transitional Relief Is Ending

Backup Withholding Comes Into Focus

Although the first reporting season is now complete, the IRS has been clear that transitional relief is temporary. Under Notice 2025‑33, backup withholding relief is generally extended through calendar year 2026. Beginning in 2027, backup withholding is required at 24% under IRC §3406 and will apply when customers fail to provide a certified TIN or are identified through IRS B‑Notice procedures.

Limited relief in 2027 is available only under specific conditions, such as successful use of the IRS TIN Matching Program for certain pre‑2026 accounts. All new accounts opened on or after January 1, 2026, are expected to have certified W‑9 documentation on file rather than relying solely on post‑transaction matching.

In practical terms, firms that deferred fully operationalizing withholding logic during the transition years will need to finalize those controls ahead of the next enforcement phase.

What About Cost Basis Reporting Under Form 1099‑DA?

While the first Form 1099‑DA filing season focused on gross proceeds, the IRS’s digital asset reporting framework does not stop there. Cost basis reporting is explicitly part of the final §6045 regulations, and its requirements begin to apply in subsequent years.

• Cost basis reporting begins with transactions in 2026 for digital assets acquired on or after the applicable effective date.

• Assets acquired prior to the effective date may be treated as non‑covered, meaning basis reporting is not required for those positions unless otherwise provided by regulation.

This staggered approach reflects the IRS’s recognition that cost basis determination for digital assets presents unique operational challenges, including incomplete acquisition data, wallet‑to‑wallet transfers, and historical activity outside broker visibility. Importantly, cost basis reporting is not a discretionary enhancement; it is a core element of the final digital asset broker regulations

W‑9 Collection Will Begin (Even as the Final Form Remains DRAFT)

One of the most significant operational shifts associated with the end of backup withholding relief is the expectation that firms will begin systematic W‑9 collection and certification.

Starting in 2026, brokers should be prepared to:

• Obtain certified taxpayer identification numbers via Form W‑9 for U.S. customers,

• Remediate mismatches and missing documentation proactively,

• Maintain defensible documentation to support audit readiness and B‑Notice compliance.

Notably, the IRS has released a draft Form W‑9 with a January 2026 revision date, even though the final version has not yet been posted.

Key proposed changes include a new certification allowing U.S. digital asset brokers to identify themselves as exempt recipients in certain multi‑broker transaction scenarios, clarifications that sole proprietors and disregarded entities must furnish owner‑level TINs rather than entity EINs, and structural alignment with the §6045 digital asset reporting framework to reduce duplicate reporting and misclassification risk.

Even while the form remains in draft status, these updates signal how the IRS intends documentation to support enforcement of the digital asset reporting rules once transitional relief expires.

Preparing for the Next Phase of Enforcement

As Form 1099‑DA moves from its introductory phase toward full enforcement, regulatory focus is shifting away from whether reporting occurs and toward how defensible compliance programs are.

Firms should now be evaluating whether W‑9 collection is embedded into onboarding workflows, how TIN validation and mismatch remediation will operate at scale, when backup withholding logic must be activated, cost basis is being updated and tracked, and whether current systems can support audit‑ready reporting across transactions, documentation, and withholding.

The completion of the first 1099‑DA reporting season represents meaningful progress — but it also marks the beginning of a more enforcement‑driven phase of digital asset tax compliance.

How TAINA Supports Firms Impacted by Form 1099‑DA

TAINA helps financial institutions, digital asset brokers, and intermediaries operationalize compliance with the 1099‑DA regulations through end‑to‑end documentation, TIN match capabilities, and form validations.

Our platform enables firms to:

• Digitally collect, validate, and manage Forms W‑9 and related tax documentation at scale,

• Automate TIN validation and mismatch remediation using IRS‑aligned rules,

• Maintain auditable evidence across onboarding, remediation, and change‑in‑circumstance events,

• Support transition from reliance‑based relief to full backup withholding readiness,

• Integrate tax documentation workflows directly into existing onboarding and transaction systems.

As regulatory expectations around Form 1099‑DA continue to mature, TAINA supports firms at every stage from transitional reporting to long‑term operational compliance.

As global regulators expand expectations around digital asset transparency, having scalable, automated, and reliable compliance processes is no longer optional.

If you’d like to see how TAINA can simplify and streamline your CARF and CRS compliance journey, we’d be delighted to request a demo.

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