The IRS is in the process of drafting proposed regulations on digital asset reporting requirements, but the details are yet to be determined. Accounting Today reported.

During the 2024 Tax Reporting and Withholding Conference, there was discussion of digital asset reporting on the new Form 1099-DA, as well as the proposed regulations. Jessalyn Dean, vice president of tax information reporting at  Ledgible, a cryptocurrency tax and accounting software developer, said that the IRS is currently working on the Crypto Asset Reporting Framework (CARF), which would coordinate the United States' collection and exchange of tax information on non-U.S. people to foreign tax authorities,  Accounting Today reported.

John Sweeney, special counsel in the IRS’s Office of Associate Chief Counsel, told the conference attendees that changes will have to be made to future versions of the 1099 and 1042-S regulations in order to collect the information that is needed to exchange tax data with foreign tax authorities—for example, account balances, which are not currently collected under U.S. regulations. 

"The rumor is that we should have the final regulations by the end of the year," said Dean. "My sense is that they're waiting because they want to coordinate them with the international reporting under CARF, because Sweeney said that his team is working on the CARF regulations." 

Sweeney noted that due to the work on the CARF, the IRS intends to draft coordinating regulations between the CARF and U.S. Form 1099 and Form 1042-S reporting in order to reduce duplicate reporting for U.S. and non-U.S. crypto and digital asset providers. 

Among the highlights of the proposed regulations, said Dean, are broker definition, digital asset definition, and wash sales.

The IRS has also issued a draft of the new Form 1099-DA. The new form has a look and feel similar to Form 1099-B for reporting sales of traditional financial products, with most of the boxes lining up with the required information listed in the proposed regulations from August 2023, according to Dean. 

"The inclusion of a 'wash sale loss disallowed' Box 11 does not mean that crypto is subject to wash sale rules," she said. "It is included for purposes of digital assets that are also stock or securities already subject to wash sale rules—such as certain tokenized equities."