IRS proposal addresses digital asset statement e-delivery

Digital asset reporting requirements during transition period

IRS Notice 2026-20 provides tax professionals important insight into the rollout of new digital asset reporting requirements and what to expect during the transition. The guidance outlines how brokers and taxpayers may report transactions on Form 1099-DA and clarifies that a relief period instituted under Notice 2025-7 has been extended through the end of 2026. This means for transactions during the relief period, taxpayers can continue to avoid the default FIFO rule of §1.1012-1(j)(3)(ii) by using alternative methods to identify digital asset units to be sold, disposed of or transferred. The methods are outlined in Notice 2026-20.

Even if taxpayers do not receive Form 1099-DA or other reporting statements, they are still responsible for reporting digital asset gains and losses. The extension will provide taxpayers, tax pros and digital brokers with flexibility to ensure compliance during this transition period. At the same time, the IRS continues building out the reporting framework for digital asset transactions.

How proposed rules could affect digital asset reporting

Digital asset reporting continues to evolve, and tax professionals should expect more standardized reporting as new rules take effect. A recent proposal published in the Federal Register addresses how brokers can electronically furnish payee statements related to digital asset sales.

The proposed rules focus on statements that brokers must provide to taxpayers when reporting digital asset transactions to the IRS. These statements give taxpayers the information they need to properly report gains or losses from digital asset sales.

Electronic delivery of digital asset statements

Under the proposal, brokers may furnish payee statements electronically rather than by mail if certain requirements are met. Electronic delivery may include providing the statement through a secure online account or sending it through an electronic communication method.

Before switching to electronic delivery, brokers generally must obtain the customer's affirmative consent. This means taxpayers must agree to receive the statement electronically instead of by mail. For taxpayers who do not consent, brokers would still be required to furnish the statement in paper form.

Statements tied to digital asset sales

When a digital asset is sold or exchanged, the broker generally must report the transaction to the IRS and furnish a corresponding statement to the taxpayer. The statement provides key details about the transaction, so taxpayers can accurately report the activity on their tax returns. These transactions may include cryptocurrency or other blockchain-based assets.

The proposal offers two qualified methods to furnish the required information: posting to an electronically accessible specified location with required notice mechanics, or direct transmittal (email attachment) with specific required information and “requested notice” options.

Why the IRS is focusing on digital asset reporting

Digital asset transactions have increased significantly in recent years. As a result, the IRS has expanded reporting requirements to improve compliance and provide clearer information to taxpayers.

Broker reporting is intended to create a system similar to other investment reporting. Just as taxpayers receive statements reporting stock sales, digital asset investors will receive statements summarizing certain digital asset transactions.

These statements will help taxpayers determine the tax consequences of their transactions and ensure that the IRS receives matching information for compliance purposes. 

What this means for tax professionals

As digital asset reporting rules develop, tax professionals should expect clients to begin receiving more formal documentation related to digital asset activity.

Electronic delivery of payee statements could also affect how clients receive and organize their tax documents. Clients may need to retrieve statements from online accounts rather than receive them in the mail.

Practitioners may want to remind clients who invest in digital assets to:

• Monitor their digital asset accounts for tax reporting statements
• Download and retain electronic statements for their records
• Provide those statements to their tax preparer during tax season

Electronic statements may contain critical details about digital asset transactions that affect gain or loss calculations.

Preparing for expanded reporting

The IRS proposal reflects a broader effort to modernize reporting requirements for digital asset transactions. Allowing brokers to furnish statements electronically is intended to make the process more efficient while still ensuring taxpayers receive the information they need.

For tax professionals, the key takeaway is that digital asset reporting is becoming more structured and more visible. As new reporting rules take effect, clients who trade or sell digital assets will likely receive Form 1099-DA payee statements that must be reviewed during return preparation.