Refusing new IRS crypto tax forms could cost you your exchange account

Log in to Coinbase next tax season, and your tax documents might no longer arrive by mail.

Under a new IRS proposal, crypto exchanges could be required to file Form 1099-DA electronically. This form reports digital asset trades, and could refuse to do business with customers who decline to provide it.

The comment period closes May 5, and if finalized, the rule would shift crypto tax reporting from the mailbox to the platform.

This is not a tax cut or a rollback of reporting requirements. Brokers still send identical information to the IRS regardless of how they deliver forms to customers. The proposal permits exchanges to make app-based delivery mandatory.

The result: millions of crypto users would receive tax forms exclusively through email and in-app document centers, with no paper backup and no right to switch back.

The twist: crypto taxes are not getting lighter. They are getting quieter.

What actually changes

The IRS proposal creates an alternative electronic delivery process for Form 1099-DA.

Under current rules, brokers must offer customers paper forms. The proposal would allow exchanges to use streamlined consent, where customers agree to electronic delivery during account setup, and exchanges could terminate relationships with anyone who refuses.

Consent would likely appear as a pop-up with an “I agree” button, with language indicating the broker may not continue servicing customers who decline.

Once customers consent, exchanges would not be required to let them withdraw that consent while remaining customers. The only guaranteed paper fallback would be a notice if email delivery fails, not the full tax document.

Delivery would happen via posting forms to an online document center with email notification or via a direct email attachment.

Exchanges must maintain access through Oct. 15 of the following year and retain prior statements for seven years. Undeliverable email triggers a physical notice within 30 days, but that is procedural, not a substitute for the mail cue many users expect.

The bigger enforcement shift

This proposal sits inside a larger compliance buildout.

Starting with transactions on or after Jan. 1, 2025, crypto brokers must file Form 1099-DA reporting gross proceeds.

Basis reporting, cost information needed to calculate gains and losses, phases in for certain transactions starting Jan. 1, 2026, only for covered assets acquired from and held with the same broker.

The enforcement math is significant. A Government Accountability Office report found that the IRS Automated Underreporter program identified potential underreported income in over 1 million cases, totaling $6.6 billion, in fiscal 2023.

Form 1099-DA feeds that match the matching engine. An IRS research paper found 6.5% of individuals, 17.4 million people, reported cryptocurrency sales from 2013 through 2021, while external surveys suggested 12% to 21% of US adults owned crypto.

The gap implies many holders never appear in sales reporting.

The Joint Committee on Taxation estimated digital asset reporting provisions would raise roughly $28 billion over 10 years. The IRS cites an internal study estimating that up to 75% of taxpayers with digital assets are noncompliant.

The electronic delivery proposal is not about easing burdens. It is about standardizing infrastructure for automated compliance.

What retail users would notice

The user experience shifts from annual paper envelopes to persistent digital workflows. Tax season becomes a document-center notification rather than a mailbox event.

For users accustomed to physical forms as their filing reminder, the shift creates new ways to miss deadlines.

Exchanges would integrate consent into onboarding or account settings, presented as routine platform terms. Email delivery relies on users maintaining current contact information and checking spam filters.

In-app document centers blend tax forms into notification streams that handle trade confirmations, security alerts, and promotions. The seven-year retention requirement means historical forms remain accessible, but only if users know to look for them.

Coinbase’s 2025 10-K reports 9.2 million monthly transacting users and $376 billion in assets on the platform. Other major exchanges have comparable scale.

If even a fraction of tax documents adopt mandatory electronic consent, the volume of tax documents moving exclusively through digital channels becomes substantial.

The enforcement gets more invisible

The critical distinction: this proposal changes how customers receive forms, not whether the IRS receives them.

Broker reporting to the government continues unchanged. An exchange that shifts to app-only delivery still files identical information with the IRS.

The IRS explicitly states that taxpayers must report digital asset transactions regardless of whether they receive Form 1099-DA. The agency emphasizes recordkeeping: taxpayers must maintain their own basis records to calculate gains and losses, especially during the phase-in when many forms will not include basis.

For 2025 transactions, brokers generally report only gross proceeds. Basis reporting begins in 2026 for certain assets held with the same broker from acquisition.

This creates a compliance gap where users need their own trade history exports even if they receive a form. The electronic delivery proposal makes accessing historical data more dependent on platform tools, such as document centers, CSV exports, and API access, rather than mailed statements.

From an enforcement perspective, the shift is efficient. Information returns are submitted to the IRS digitally regardless of the customer’s delivery method. Automated matching compares filings against broker reports without manual intervention.

Users who miss app-based notifications still face potential underreporter notices, penalties, and interest. The system becomes less visible to inattentive users while remaining fully visible to the IRS.

What happens next

The proposal is open for public comment through May 5, 2026. If finalized, it would apply to forms furnished on or after Jan. 1 of the calendar year following publication, meaning the earliest effect would be tax season 2027 or later.

Whether exchanges adopt mandatory electronic delivery is a business decision. The proposal creates permission, not a mandate. Some brokers keep paper options as customer service, while others view digital-only as operationally simpler.

Adoption rates will determine how many users face the “consent or lose access” choice.

Users should assume electronic delivery will become standard across major platforms once permitted.

Treat exchange email settings as critical tax infrastructure. Ensure contact information stays current. Enable document notifications. Check spam filters before Feb. 15, when forms are due. Download and back up trade history regularly, especially for transactions across multiple platforms where no single broker has complete basis information.

The broader context is global convergence toward standardized crypto tax reporting.

The OECD’s Crypto-Asset Reporting Framework is being adopted across jurisdictions. The EU’s DAC8 directive expands reporting to cover crypto assets. The US electronic delivery proposal fits within a multi-year buildout in which crypto’s informality premium shrinks toward the information returns of traditional securities.

Crypto tax reporting is not disappearing into apps to make compliance lighter. It is moving inside digital rails to make enforcement more automatic and harder to ignore.

The IRS is not cutting the paper trail. It lets the trail move from the mailbox to the platform, where broker copies still flow to the government, while customer copies become just one more notification in a crowded interface.