IRS Proposes New Rules for Electronic Delivery of Digital Asset Payee Statements

The US Department of the Treasury and Internal Revenue Service (IRS) released proposed regulations establishing a comprehensive framework for the electronic delivery of Form 1099-DA (Digital Asset Proceeds) on March 6, 2026. The proposal reflects the government’s continued effort to modernize reporting obligations for digital asset brokers while setting detailed requirements for taxpayer consent, disclosures, and delivery mechanics.

The proposed rules are particularly relevant for digital asset trading platforms, hosted wallet providers, and certain payment processors that fall within the expanded definition of “broker.”

Consistent with prior IRS digital asset guidance highlighted in earlier Morgan Lewis LawFlashes [1] —including discussions of proposed digital asset broker reporting regulations and evolving compliance frameworks—the newly proposed rules under Prop. Treas. Reg. § 1.6045-1(k) further refine the operational expectations for brokers in this space. In particular, the proposal reflects a continued shift toward electronic-first reporting regimes, while layering in detailed consent, disclosure, and delivery requirements that may significantly affect broker compliance processes and customer interactions.

This regulatory guidance is welcome, as it has been over four years since Congress amended the “broker” definition in Section 6045 to include digital asset brokers in the Infrastructure Investment and Jobs Act. [2]

Below are key highlights of the proposed rules.

EXPANDED FLEXIBILITY FOR ELECTRONIC DELIVERY—WITH STRICT CONSENT REQUIREMENTS

Under the proposed regulations, brokers may furnish Form 1099-DA statements electronically without offering a paper alternative, provided customers give affirmative, standalone consent. This consent must be obtained through a clear, explicit action—such as checking a box, clicking a button, or completing an electronic form. The proposal builds on general Electronic Signatures in Global and National Commerce (ESIGN) Act principles but imposes more detailed, tax-specific consent and disclosure requirements.

When requesting consent, brokers must provide detailed disclosures addressing the following:

• Scope of Consent – Whether it applies to all Form 1099-DA statements issued by the broker
• Hardware and Software Requirements – Systems needed to access, download, and print statements
• Delivery Method – The specific electronic method the broker will use
• Notification Procedures – How and when customers will receive notice (e.g., email), including the ability to update notification preferences
• Consequences of Non-Consent – Any service limitations imposed on customers who decline electronic delivery
• Withdrawal Rights – Whether consent can be withdrawn and, if so, how and when it becomes effective
• Access to Information – Where customers can find these disclosures in the future

If material changes to required hardware or software take place, brokers must obtain new customer consent. Notably, brokers seeking to electronically furnish both Form 1099-DA and Form 1099-B must comply with separate consent regimes for each form. This requirement may complicate onboarding and consent management for brokers that furnish both forms through integrated platforms.

HANDLING CUSTOMER REFUSAL OF ELECTRONIC DELIVERY

Notably, under these proposed regulations, if a customer declines to consent, the proposed regulations permit brokers to limit or terminate services rather than provide paper statements, as long as the broker has provided clear prior disclosure in the consent process. However, brokers must still furnish paper statements for prior transactions before consent was denied.

PERMISSIBLE DELIVERY METHODS AND SPECIAL RULES

The proposal identifies two acceptable electronic delivery methods: (1) Posting statements to an online account, coupled with a mandatory email notice; and (2) direct email delivery of the statement.

Customers may request additional notifications via alternative channels (e.g., mail).

A special rule applies to brokers operating exclusively through kiosks or acting as digital asset payment processors. These brokers must send disclosure statements via email, mail, or private delivery service within five business days of receiving consent and offer customers the option to request additional communication methods.

FALLBACK PROCEDURES FOR UNDELIVERABLE COMMUNICATIONS

The proposed regulations impose strict fallback requirements when electronic delivery fails: Brokers must promptly resend notices to a corrected email address, or mail the statement or notice within 30 days.

For corrected statements, brokers must provide notice within five business days.

ACCESS, RETENTION, AND TIMING REQUIREMENTS

The proposed rules align Form 1099-DA timing with existing Section 6045 requirements:

• Furnishing Deadline – February 15 of the year following or consistent with existing Section 6045 deadlines, as applicable
• Online Availability – Statements must remain accessible through October 15 of that year
• Record Retention – Brokers must retain and provide statements upon request for seven years

NEXT STEPS FOR DIGITAL ASSET BROKERS

The proposed regulations introduce a simultaneously flexible but compliance-intensive framework for electronic delivery of Forms 1099-DA. In light of these proposed regulations, brokers should begin evaluating the following:

• Consent collection workflows and disclosure language
• Technology systems for secure delivery and long-term access
• Procedures for handling failed deliveries and customer preferences
• Coordination with existing Form 1099-B compliance processes

The proposed regulations are not yet effective; however, taxpayers may generally rely on them pending finalization, and the rules are expected to apply to Forms 1099-DA furnished for transactions occurring in the first applicable reporting year after final regulations are issued.

If finalized, these regulations will significantly shape how digital asset brokers manage customer communications and reporting obligations. Brokers should also assess cybersecurity and data protection implications associated with different delivery methods, particularly email-based delivery.

Comments and requests for public hearing regarding these proposed regulations are due May 5, 2026.