Bitcoin tax panic is rising because the IRS can see your crypto sales — and you may have to prove what you paid

The initial rollout of the IRS's new Form 1099-DA for digital asset broker reporting in 2025 primarily focuses on reporting gross sales proceeds, leaving the crucial cost basis information often blank. This discrepancy creates significant pressure for taxpayers, like designer Maya, who bought, traded, and moved crypto across various exchanges and self-custody wallets, as they must now reconstruct their purchase history to accurately report gains and avoid potential IRS discrepancies via CP2000 notices. While basis reporting becomes mandatory for sales after January 1, 2026, the current system rewards staying on a single platform, contrasting with crypto culture that encouraged movement and self-custody. Experts warn that missing basis data can lead to taxpayers overreporting gains by assuming the reported proceeds are the net gain, emphasizing that taxpayers remain responsible for calculating and substantiating their basis regardless of the form received. The IRS is also clarifying reporting thresholds for certain transactions and has provided penalty relief for good-faith efforts in 2025, signaling a tighter enforcement posture in subsequent years, aligning with global reporting frameworks like the EU's DAC8.

(Source：CryptoSlate)