On July 8, 2026, Andrew Gordon, Managing Attorney of Gordon Law Group, testified at the IRS and Treasury public hearing on proposed regulations governing the electronic furnishing of Form 1099-DA statements (REG-105064-25). Gordon Law was one of only two organizations invited to present oral testimony, alongside Coinbase, and we used the opportunity to press for changes that go well beyond the delivery question the hearing was convened to address.
Since 2014, our firm has represented thousands of taxpayers in digital asset tax matters, and the 2025 filing season gave us a front-row view of how the new 1099-DA regime is working in practice. Here is what we told the government, and why it matters for anyone who holds or trades crypto.
Electronic Delivery Is the Easy Part
We strongly support electronic delivery of 1099-DA statements, which naturally aligns with an asset class that exists entirely online. Paper 1099-DAs created real problems this past filing season, because taxpayers with any meaningful transaction volume were forced to manually re-enter data so it could be reconciled with their own records, their tax preparation software, and the third-party tools they use to track crypto activity. That process added expense and introduced errors without any corresponding benefit.
But delivery format was never the biggest problem with the 1099-DA rollout, and we told Treasury and the IRS that it would be a missed opportunity to finalize electronic delivery rules without confronting the larger issues the 2025 filing season exposed.
The Real Problem Is Basis Reporting
For 2025, Form 1099-DA reports proceeds without cost basis. In theory, taxpayers can substantiate basis from their own records, but in practice many cannot, particularly when the platforms they originally purchased on have since shut down. Because the IRS runs automated matching against these forms, taxpayers are currently being forced to defend six- and seven-figure deficiencies that exist only because basis information is missing from the form, not because they actually owe the tax.
“Taxpayers are being asked to disprove liabilities the IRS computed from incomplete data,” says Andrew Gordon, tax attorney and CPA. “When a form shows proceeds with no basis, the matching system treats the entire amount as gain, and the burden lands on the taxpayer to unwind it.”
The natural assumption is that mandatory basis reporting, which takes effect for 2026, will solve this. Our testimony explained why it may make matters worse. A broker can only reliably know basis for assets purchased on its own platform, so the moment a customer transfers assets in from another exchange, a self-custodied wallet, or a DeFi protocol, the broker has no accurate basis information to report. The existing rules presume the customer will furnish that information, but many investors have incomplete records or none at all, and never understood that tracking basis was their responsibility in the first place, since their traditional brokerage accounts have always done it for them. If unvalidated basis figures are reported and treated as authoritative, taxpayers, practitioners, and the government will all be working from numbers that nobody can actually stand behind.
What We Asked Treasury and the IRS to Do
Our recommendations focused on making basis data meaningful rather than merely present. We asked the government to delay the basis reporting requirement for transactions where the broker lacks validated data from its own platform, until three conditions are met: standardized broker-to-broker basis transfer rules with reasonable defaults, a common IRS-specified data format for both broker-to-customer delivery and broker-to-broker transfer, and accessible official guidance that teaches taxpayers how digital assets are taxed and how to provide basis information to brokers. We also urged a clear distinction between validated and unvalidated basis, and between situations where basis is unknown and situations where basis is genuinely zero.
On the delivery side, we recommended that every electronically furnished 1099-DA be accompanied by a machine-readable file. Brokers already maintain this information in structured form, and with 78 percent of crypto investors relying on general tax preparation software, this single change would eliminate hours of manual data entry and the errors that come with it.
A Path Forward for Non-Willful Taxpayers
Our testimony also raised an issue that reaches beyond this rulemaking. Once taxpayers realize they have made mistakes on past returns involving digital assets, there is still no meaningful program that lets non-willful taxpayers voluntarily come forward and fix them. We recommended a streamlined compliance program modeled on the Streamlined Filing Compliance Procedures for offshore accounts, which resolved matters for thousands of taxpayers and remains one of the most successful voluntary compliance initiatives the IRS has run. Recent developments suggest momentum is building, including the Digital Assets Voluntary Disclosure Program Act (H.R. 9174) introduced by Rep. Aaron Bean and public statements from IRS officials expressing interest in a crypto-specific disclosure program.
Read the Full Testimony
The complete written testimony covers additional recommendations, including consumer protections around consent for electronic delivery and the elimination of 1099-DA delivery by email attachment.
Read Andrew Gordon’s full testimony to the IRS and Treasury (PDF)
