IRS Proposes Easing Rules for Digital Asset Brokers on Electronic Customer Statements

The IRS on March 5 published proposed regulations that would make it easier for digital asset brokers to provide to their customers electronically (rather than having to send paper statements) the information reported to the IRS on Form 1099-DA, Digital Asset Proceeds from Broker Transactions. 

For brokers required to furnish to their customers statements on digital asset transactions reported to the IRS, the proposed rules set out an optional alternative process for obtaining customer consent to receive the statements electronically without offering the alternative of paper statements. The rules are intended to ease the burden on brokers with respect to providing paper statements.

Brokers are permitted to follow the proposed regulations beginning with statements required to be furnished on or after January 1, 2027.

Concurrently with the proposed rules addressing Form 1099-DA, the IRS issued Notice 2026-04, requesting comments on issues involved with electronic furnishing of Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, and other payee statements. The notice seeks comments on whether the requirements that brokers currently must meet to furnish these payee statements to their customers in an electronic format to be treated as timely furnishing the statements should be modified.

Current Broker Requirements for Customer Statements

Under Section 6045, brokers are required to file information returns with respect to sales of digital assets and certain other transactions effected by the broker on behalf of each customer. Brokers file this information with the IRS on Form 1099-DA or Form 1099-B, as appropriate, and must also furnish statements to each customer.

While providing electronic rather than paper statements is permitted under current rules, applicable regulations under Section 6051 provide that a recipient must have affirmatively consented to receive the statement electronically and must not have withdrawn that consent before the statement is furnished.

Proposed Alternative Method for Form 1099-D Statements

Under the proposed rules, rather than requiring brokers to furnish the Form 1099-DA statements on paper to any customer that does not consent to receiving these statements electronically, brokers would be permitted to terminate their business relationship with customers that do not consent to electronic statements. In addition, unlike the current rules, the proposed regulations would not require brokers to give their customers the ability to withdraw previously provided consent.

To compensate for customers no longer having the right to paper statements, the proposed rules would also impose enhanced notification requirements on brokers to increase the likelihood that customers receive the communication that their electronic Form 1099-DA statements are available. 

Under the proposed rules, brokers would be permitted to furnish Form 1099-DA statements to customers in an electronic format in lieu of a paper format (and without the requirement to offer the paper format) if the broker obtains consent from the customer, uses one of two qualified electronic delivery methods, and meets certain other requirements relating to continuing disclosure, format, notice, and access period. 

Unlike the current consent requirements, in obtaining customer consent to electronic notices under the proposed regulations, brokers would no longer be required to offer a paper option, nor would they be required to allow customers to withdraw a previous consent. 

The proposed regulations include two options as qualified electronic delivery methods:

1. The broker may post the Form 1099-DA statement to a specified location that is electronically accessible, such as the furnisher’s website, mobile device application, or other online platform. Brokers using this qualified electronic delivery method would also be required to notify the customer by email that the Form 1099-DA statement has been so posted. 
2. Alternatively, the broker may transmit the Form 1099-DA statement directly to the customer by attaching it to (or otherwise including it with) an email to the customer.