The IRS has issued proposed regs that would give digital asset brokers an optional, streamlined process for electronically furnishing a new information return to customers as part of an effort to reduce compliance burdens on brokers. (IR 2026-29; Notice 2026-4; Preamble to Prop Reg REG-105064-25, 3/5/2026)
Current Rules
Under the current rules for furnishing payee statements electronically, which are based on the framework established for Form W-2 under IRC § 6051, a broker must obtain affirmative consent from a customer before sending a tax statement electronically. This framework guarantees customers several key rights, including the right to receive a paper copy of the statement if they do not consent and the right to withdraw their consent at any time, after which the broker must revert to providing paper statements.
The nature of digital asset trading, which is conducted almost exclusively online, means that some customers engage in an extremely high volume of transactions. According to the proposed regs, this could result in a single customer’s annual Form 1099-DA, Digital Asset Proceeds From Broker Transactions, being hundreds or even thousands of pages long. The associated costs and logistical burdens of printing and mailing such voluminous documents were cited as potentially unmanageable for brokers.
These concerns reflect findings from the IRS Advisory Council, which reported that applying the existing paper-delivery mandate to the digital asset industry would be impractical.
Electronic-Only Alternative
The newly proposed regs would create an optional, alternative process that brokers could use specifically for Form 1099-DA. Under this method, a broker could require customers to accept electronic delivery of their Form 1099-DA as a condition of using their services. The rules would permit a broker to terminate the business relationship with a customer who refuses to provide consent. Furthermore, brokers using this method would not be required to offer customers the ability to withdraw a previously provided consent while they remain a customer.
To ensure customers receive their tax documents, the proposed rules establish enhanced notification and delivery requirements. A broker must notify a customer via email when their Form 1099-DA is available. The email, and its subject line, must include the statement “IMPORTANT TAX RETURN DOCUMENT AVAILABLE” in capital letters and provide clear instructions on how to access the form. If a notice is returned as undeliverable and a corrected email address cannot be found, the broker must then mail a paper notice within 30 days.
The proposed regs also specify how long customers must be able to access their statements. The Form 1099-DA must remain available on the broker’s platform through October 15 of the year following the transactions. Corrected statements must be available through October 15 of the year following the calendar year to which the statements relate or the date that is 90 days after the corrected statements are posted, whichever is later.
Brokers would also be required to retain and make available upon request all previously furnished 1099-DA statements for seven years, ensuring customers have access for the full period of limitations for tax assessment. If finalized, these new rules would apply to statements required to be furnished on or after January 1, 2027.
IRS Seeks Comments on Broader E-Furnishing Rules
At the same time, the IRS issued Notice 2026-4 to request public comments on whether similar, less burdensome consent procedures should be developed for other types of payee statements. The notice specifically asks about Form 1099-B, Proceeds from Broker and Barter Exchange Transactions, and other statements that are often included on a composite statement. The deadline for submitting written comments on the notice is May 23, 2026.
The notice acknowledges that while many investors are technologically savvy, the customer base for traditional securities may be different from that of digital assets. The IRS is seeking input on how to reduce broker burden while ensuring all customers, including elderly individuals or persons with disabilities who may be less comfortable with technology, can reliably access their tax information.
The notice also asks for feedback on a specific technical question: whether the list of forms permitted on a Form 1099-B composite statement should be expanded to include Form 1099-MISC for the purpose of reporting staking rewards, which are common in the digital asset industry.
For more on digital asset information returns, see Checkpoint’s Federal Tax Coordinator 2d ¶ S-3700.
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