According to a report by Interactivecrypto on March 8th, Coinbase stated that the IRS's 1099-DA rule for digital asset tax reporting is overly cumbersome and may impose unnecessary administrative burdens on a large number of cryptocurrency holders. TechFlow Zlatkin, Coinbase's VP of Tax, pointed out that the new rule requires reporting small transactions such as stablecoin transactions and network gas fees. Since stablecoins themselves have relatively stable prices and gas fees are typically only a few dollars or even less, reporting such information could lead to "over-reporting" and further complicate the tax system.
Coinbase is reportedly sending 1099-DA forms to millions of US users. This system requires exchanges to report users' digital asset transactions to the IRS and provide users with copies so they can self-report profits and losses. However, in this year's filings, Coinbase will only report the gross proceeds from digital asset sales to the IRS, without providing a cost basis. Users will need to calculate their true taxable income themselves, which may confuse some investors. Coinbase plans to start calculating the cost basis for users from next tax year onwards to simplify the filing process.
