IRS Notice 2025-33 provides transitional relief for digital asset brokers, extending and modifying previous relief under Notice 2024-56. Here’s what you need to know ¹ ²:
- Backup Withholding Relief: Brokers are not required to backup withhold for digital asset transactions in 2026. For 2027 transactions, brokers won’t need to backup withhold if they submit the customer’s name and tax identification number (TIN) to the IRS’s TIN Matching Program and receive a matching response.
- TIN Matching: For 2027 transactions, brokers can continue to rely on uncertified TINs for preexisting customers if they receive a match through the IRS TIN matching service.
- Digital Asset-to-Asset Trades: For 2027 trades (excluding NFTs), backup withholding is limited to 24% of the amount received upon liquidation, rather than 24% of the digital asset’s value at transaction time.
- Exempt Foreign Persons: Brokers won’t face penalties for failure to file Form 1099-DA or backup withholding for certain preexisting customers who haven’t been classified as US persons and have an address outside the US.
- Relief for Decrease in Withheld Digital Assets: Brokers are provided relief for failure to withhold and pay the full backup withholding tax due to a decrease in the value of withheld digital assets in 2027, if the broker immediately liquidates the withheld digital assets for cash.
Notice 2025-33 aims to give brokers more time to comply with reporting requirements, addressing concerns raised by the industry. The notice applies to digital asset sales and exchange transactions reported on Form 1099-DA ¹ ².
Source: IRS
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