What are the consequences of not reporting a 1099-DA?
Dec 18, 2025・6 min read
The IRS is taking steps to close the crypto tax gap by requiring brokers and trading platforms to issue Form 1099-DA for digital asset sales and exchanges. Form 1099-DA reports your digital asset dispositions for the year, which flow into your overall taxable gain or loss. This reporting requirement applies to transactions occurring on or after January 1, 2025.When your platform or broker issues a 1099-DA reporting your crypto transactions, the IRS receives a copy. As such, missing or inconsistent reporting on your return can increase your risk of IRS follow-up.
Read on to find out why keeping your tax return aligned with Form 1099-DA matters for compliance, and what the consequences of not reporting a 1099-DA can mean for you. You’ll also learn about proactive steps you can take to correct an omission and stay compliant.
What happens if you don’t report a 1099-DA?
If you leave digital asset sales from a 1099-DA off your tax return, several consequences may follow. Some are financial, while others involve additional IRS correspondence or requests for clarification. The specific outcome depends on the size of the discrepancy and how quickly the issue is corrected, but here are the most common risks to be aware of.
CP2000 notice
If your tax return doesn’t include the digital asset sales reported on a 1099-DA, you may receive a CP2000 notice. This notice compares what you reported with the information the IRS received from brokers and recalculates your tax based on the missing transactions.
Because 1099-DAs issued for the 2025 tax year report gross proceeds only, the IRS may compute the tax using just that amount if it doesn’t have your cost basis.
Accuracy-related penalties
If the IRS determines that the underpayment resulted from negligence, substantial understatement, or similar issues, an accuracy-related penalty may apply. This penalty is typically 20% of the underpaid tax.
Interest on unpaid taxes
Interest begins accruing from the original due date of your tax return, not from when the IRS notices the issue. The longer the discrepancy remains unresolved, the more interest grows.
Possible civil fraud penalties
If the IRS finds clear evidence that the omission was intentional, the consequences escalate significantly. Civil fraud penalties can reach 75% of the unpaid tax, making this the most severe financial penalty associated with noncompliance.
Increased audit risk
A single or minor error generally won’t lead to a full audit. However, your audit risk can increase when the IRS sees repeated omissions, large gaps between what brokers report and what you report, or patterns of underreporting across multiple years. Significant discrepancies in digital asset reporting may prompt the IRS to take a closer look or request supporting documentation, which can be time-consuming and stressful.
How the IRS knows you didn’t report a 1099-DA
When brokers issue Form 1099-DA, the IRS receives a copy at the same time you do. This gives the IRS an independent record of your digital asset sales and exchanges, separate from what you report on your tax return.
The IRS uses the information it receives to compare against your filed return. If the transactions reported on a 1099-DA are missing or inconsistent with your filing, the IRS may identify a discrepancy.
For example, if a broker reports a sale of Ethereum (ETH) on a 1099-DA and that sale doesn’t appear on your tax return, the IRS may flag the mismatch during its review.
In some cases, the IRS may contact you, often through a CP2000 notice, to reconcile the difference. The notice outlines the discrepancy, recalculates tax based on the information the IRS has, and may include penalties and interest. While a 1099-DA-based CP2000 notice is not an audit, it is an official communication that requires a timely response. Addressing the issue promptly can help minimize additional interest or penalties.
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How to correct a missing 1099-DA on your tax return
Realizing you’ve missed a 1099-DA is stressful, but the fix is usually straightforward. Here are practical steps to take as soon as you discover a missing 1099-DA from your tax return.
Gather your documents
Start by collecting the key items you’ll need to review the situation. This includes the 1099-DA (or substitute statement), your originally filed tax return, the CoinTracker report or Form 8949 you used when filing, and your exchange or wallet transaction histories. Having these documents side by side gives you a complete picture of what was reported to the IRS versus what you included on your return.
Confirm whether the transactions were already reported
Compare the transactions on the 1099-DA with the sales and exchanges included on your tax return or crypto tax report. If those transactions were already included, no amendment is required. Simply retain documentation showing how the 1099-DA activity was reported.
Determine basis and update your crypto records
If the 1099-DA transactions were omitted from your original filing, the next step is to determine whether you have complete cost basis information for those assets. In most cases, you’ll need to use CoinTracker to recompute your cost basis. Once cost basis is established, generate an updated Form 8949 or digital asset gain/loss report that includes the missing transactions so your amended return accurately reflects the correct gain or loss.
Prepare your amended return
Prepare Form 1040-X so the amended return reflects both your records and the 1099-DA information the IRS received. Use the updated report to correct Form 8949, Schedule D, and other parts of your return as needed.
Pay any additional tax
If the correction results in additional tax owed, pay the balance as soon as possible. Interest accrues from the original due date, and addressing the liability promptly helps minimize additional charges.
Get advice if things are complicated
If you have multiple exchanges, missing basis, or several years of reporting to correct, consult a tax professional familiar with digital assets. They can help ensure your amended return is complete and accurate.
Stay ahead of tax season with accurate reporting
Missing a 1099-DA can create problems, like additional taxes, penalties, interest charges, and even audit risk. Aside from the financial weight, missed taxes can add stress and take time away from your personal life – especially if a nonreported form leads to a full audit.
By getting help from crypto portfolios like CoinTracker, you can keep records accurate and file your taxes with confidence. Connect wallets and exchanges with CoinTracker to see your entire crypto history in one place, generate IRS-ready tax forms, and even spot tax-saving opportunities.
It’s time to make crypto tax filing stress-free. Create a free CoinTracker account now and be ready for tax season with clear, well-organized exchange records.
Disclaimer: This post is informational only and is not intended as tax advice. For tax advice, please consult a tax professional.
FAQ
Will the IRS catch a missing 1099-DA?
Brokers send a copy of your 1099-DA to the IRS. If your tax return doesn’t reflect those digital asset sales or exchanges, the discrepancy may draw IRS attention. The IRS uses information returns, analytics, and other compliance tools to identify potential underreporting, which can lead to follow-up notices.
Can I amend my taxes for a missing 1099-DA?
Yes. You can file Form 1040-X to correct your return. Before amending, review your records and confirm whether the transactions reported on the 1099-DA were already included in your filed return. If the transactions were not reported, update your gain or loss calculations, prepare the corrected forms, and file the amendment promptly to minimize additional interest.
Do I still need to report a 1099-DA if I had a loss?
Yes. Losses must be reported to ensure your tax return is complete and accurate. Reporting losses also helps support your records and may reduce your taxable income, subject to capital loss limitations.
Why is cost basis important?
Cost basis determines your actual gain or loss on a digital asset sale. If cost basis is missing, tax may be computed using only the gross proceeds reported on a 1099-DA, which can result in a higher taxable gain than you actually realized. Accurate basis ensures correct reporting and prevents overpayment.
What are the penalties for not reporting crypto income?
Penalties depend on the type and amount of income that was not reported. If digital asset sales or other taxable activity, such as staking rewards or mining income, are omitted, you may owe additional tax, interest accruing from the original due date, and potentially an accuracy-related penalty of up to 20% of the underpaid tax. If the IRS determines the omission was intentional, civil fraud penalties can apply and may reach 75% of the unpaid tax.