A16z Crypto has submitted comments to the United States Internal Revenue Service (IRS) regarding the draft 1099-DA form, expressing concerns about the unnecessary burden and risk it poses to taxpayers and brokers. The key points of their comments highlight the duplication of information reporting, the risk of sensitive information exposure, and the high cost of providing required information.

A16z Crypto argues that the requirement for multiple brokers to submit a 1099-DA form for each digital asset transaction results in unnecessary duplication of information reporting, imposing an unreasonable burden on the declarer. Moreover, the requirement for brokers to report wallet addresses is seen as unnecessary and potentially harmful, as it puts sensitive taxpayer information at significant risk.

The cost of providing the information required by the 1099-DA form is considered too high, and in some cases, it may even be impossible to achieve. A16z Crypto suggests that the final regulations should delay or 'gradually advance' the effective date of the digital asset information reporting requirements, allowing for a more feasible and less burdensome implementation.

Furthermore, A16z Crypto recommends that non-custodial wallets and digital asset payment processors should be removed from the 'broker' category listed in the 1099-DA form, and that the IRS should not require the submission of a 1099-DA form when disposing of fiat-supported stablecoins and most NFTs (Non-Fungible Tokens). Additionally, they propose that the requirement to submit a 1099-DA form should include a minimum threshold, allowing brokers to aggregate transactions for reporting purposes, streamlining the process and reducing the burden on both brokers and taxpayers.

In summary, A16z Crypto's comments urge the IRS to reconsider the draft 1099-DA form requirements, highlighting the need for a more reasonable and less burdensome approach to digital asset information reporting. By addressing these concerns, the IRS can create a more efficient and secure system for taxpayers and brokers alike.