Year One of 1099-DA: Filing Season Lessons, IRS Enforcement, and What’s Next for Crypto Reporting with Miles Fuller

A conversation with Miles Fuller, Senior Director of Government Solutions at TaxBit and former IRS Office of Chief Counsel attorney, discussing the first filing season under Form 1099-DA, broker reporting challenges, IRS enforcement expectations, lot identification relief, DeFi reporting gaps, legislative developments, and the future of international crypto tax reporting. Host: Patrick Camuso, CPA, Camuso CPA Guest: Miles Fuller, Senior Director of Government Solutions, TaxBit

Editor’s Note

The following transcript has been lightly edited for publication. Grammar, punctuation, and transcription errors have been corrected for readability. The substance of the conversation has been preserved.

Transcript

Patrick Camuso, CPA 00:00

Welcome back to The Financial Frontier. I’m your host, Patrick Camuso. I’m joined again today by a returning guest, Miles Fuller, Senior Director of Government Solutions at TaxBit. Miles is returning to the show after our last episode, where we discussed Form 1099-DA, broker reporting requirements, and our expectations surrounding implementation. Now we’re on the other side of the first filing season. The initial reporting cycle has passed, taxpayers have filed or extended, and we can begin evaluating what actually happened. Today we’re going to discuss:

• Year one lessons from Form 1099-DA
• Broker implementation challenges
• IRS enforcement expectations
• Lot identification relief
• Legislative developments
• International reporting frameworks
• The future of crypto tax compliance

Miles, welcome back to the show.

Miles Fuller 01:01

Thanks for having me back. It’s exciting to finally have a filing season behind us and begin evaluating what worked, what didn’t, and what comes next.

Patrick Camuso, CPA 01:15

Let’s start there. Year one of Form 1099-DA reporting is now effectively complete. From TaxBit’s perspective, what were the biggest implementation challenges? Were there any surprises?

Miles Fuller 01:33

Fortunately, for TaxBit and many of our customers, the filing season went relatively smoothly. One issue that did emerge involved IRS validation systems. Specifically, forms reporting very small transactions where proceeds rounded down to zero. Imagine a transaction involving a tiny fractional amount of crypto worth less than one cent. The form properly rounded proceeds to zero. Initially, however, the IRS validation system rejected those forms. That created an issue because the forms were technically correct. And in future years, when basis reporting becomes more important, even a transaction with zero proceeds could still have basis information that matters. We worked with the IRS to identify the issue and help resolve it.

Patrick Camuso, CPA 02:27

What about feedback from practitioners and taxpayers? Were you hearing anything from that side of the ecosystem?

Miles Fuller 02:39

Two themes stood out. First, timing. Some taxpayers received forms significantly later than expected. In certain cases, taxpayers had already filed or substantially completed their returns before receiving updated forms. Second, duplicate reporting. We saw instances where taxpayers received duplicate 1099 forms from the same broker. That naturally created concern that duplicate proceeds might also be transmitted to the IRS. Those situations generated significant anxiety among taxpayers and advisors.

Patrick Camuso, CPA 03:20

And on the practitioner side, I think stablecoins created another challenge.

Miles Fuller 03:27

Absolutely. Stablecoin reporting created confusion. Some stablecoin activity wasn’t included in reporting. Taxpayers naturally began asking questions: “If I’m not receiving a form for this transaction, do I still need to report it?” That created reconciliation challenges for preparers. And it created educational challenges for taxpayers.

Patrick Camuso, CPA 03:50

We saw exactly the same thing at Camuso CPA. The delayed forms reinforced why we encouraged many clients to extend. And stablecoin reporting required substantial explanation and reconciliation work. Fortunately, most of those issues were manageable if you anticipated them. But they’re definitely areas the industry will continue working through.

Miles Fuller 04:13

I agree completely. This first year revealed many of the practical implementation challenges that inevitably emerge when an entirely new reporting regime is introduced.

Patrick Camuso, CPA 04:38

One of the most important developments this year was Notice 2026-20, which extended the transitional relief originally provided under Notice 2025-7. In practical terms, taxpayers can continue using their own books and records to identify which tax lots were sold, rather than being forced to default immediately to whatever ordering methodology their broker applies. The IRS essentially acknowledged that broker-reported basis and acquisition information may not match taxpayer records during this transition period. What’s your perspective on that?

Miles Fuller 05:13

It’s a very important issue. The simplest answer for many taxpayers would be to simply mirror whatever methodology their broker is using. In many cases that means FIFO. That’s not always the most tax-efficient answer, but it does eliminate mismatches. The challenge is that many taxpayers have maintained detailed records for years using alternative identification methods. If their broker defaults to FIFO while the taxpayer uses different records, those systems can diverge. And once they diverge, they can continue diverging indefinitely.

Patrick Camuso, CPA 05:54

That’s exactly what practitioners are worried about. A mismatch today potentially becomes a permanent mismatch moving forward.

Miles Fuller 06:01

Correct. One solution we’ve been discussing is allowing taxpayers to update lot identification information directly with brokers before year-end reporting occurs. Imagine a taxpayer maintaining detailed records throughout the year. Then, before Forms 1099-DA are finalized, the broker provides an interface allowing the taxpayer to reconcile and submit those records. That could eliminate much of the mismatch problem before forms are issued.

Patrick Camuso, CPA 06:33

Essentially correcting the reporting before it reaches the IRS.

Miles Fuller 06:37

Exactly. Ideally, the taxpayer identifies lots when the sale occurs. But if the broker lacks the ability to capture that information in real time, a year-end reconciliation mechanism may be the next best solution.

Patrick Camuso, CPA 06:54

At Camuso CPA, one thing we’ve been discussing with clients is that Revenue Procedure 2024-28 changed the landscape significantly. Wallets and accounts are now effectively separated from a basis perspective. If taxpayers understand how assets flow through those environments, they may still maintain substantial control over tax outcomes while using simpler identification methods.

Miles Fuller 07:19

That’s a good point. Revenue Procedure 2024-28 fundamentally changed how taxpayers need to think about asset tracking. The separation of wallets creates both challenges and opportunities. But regardless of the methodology used, consistency becomes increasingly important.

Patrick Camuso, CPA 07:38

The larger issue here is that brokers are still building infrastructure while regulations continue evolving. They’re building systems to receive customer lot information. They’re building systems to exchange information with other brokers. They’re building basis reporting frameworks. How large is that undertaking from the broker perspective?

Miles Fuller 08:00

It’s substantial. Fortunately, platforms like TaxBit provide much of the core infrastructure. But brokers still need to integrate those systems into their own environments. One area where I think policymakers could provide significant help involves transfer statements. Specifically, regulations under Section 6045A relating to broker-to-broker basis transfers. If Treasury finalized those rules, brokers could begin building more standardized transfer frameworks. And that would significantly reduce friction throughout the ecosystem.

Patrick Camuso, CPA 08:38

Because right now we have a system where information enters one broker but doesn’t necessarily move cleanly to another.

Miles Fuller 08:46

Exactly. Transfer statements are a critical missing piece. For taxpayers operating on one exchange, reporting is already becoming fairly straightforward. For taxpayers operating across multiple custodial platforms, transfer statements could dramatically simplify compliance.

Patrick Camuso, CPA 09:06

And that’s where we start seeing the distinction between different categories of users. The simple user on one exchange. The user on multiple exchanges. And then the user operating across custodial and non-custodial environments.

Miles Fuller 09:18

That’s exactly right. Each category introduces additional complexity. And each category requires more sophisticated reporting infrastructure.

Patrick Camuso, CPA 09:29

One challenge we see constantly is data normalization. Every exchange exports information differently. Every platform structures information differently. And practitioners spend enormous amounts of time cleaning data. How much of that challenge exists on the broker side?

Miles Fuller 09:47

A tremendous amount. One of the first things TaxBit built years ago was data harmonization infrastructure. When new broker clients come onboard, a significant portion of the work involves transforming and standardizing data. The good news is that Form 1099-DA creates a common reporting framework. That gives everyone a common target. The challenge is getting all of the underlying systems aligned to that target.

Patrick Camuso, CPA 10:18

So while the reporting output is becoming standardized, the underlying data remains fragmented.

Miles Fuller 10:24

Exactly. And that’s where much of the work still remains. Long term, I think brokers will begin building more tax-oriented exports and APIs rather than simply transactional exports. That evolution will benefit taxpayers, practitioners, and brokers alike.

Patrick Camuso, CPA 10:42

One thing that’s become increasingly apparent is that reporting requirements are creating incentives. As reporting expands in custodial environments, some participants naturally begin asking whether activity may migrate toward non-custodial environments. Do you think that’s a legitimate concern?

Miles Fuller 10:59

It’s certainly something policymakers think about. Historically, whenever reporting obligations increase in one area, some activity may shift elsewhere. That doesn’t mean the reporting framework is ineffective. It simply means behavior changes in response to incentives. The challenge is that digital assets operate across a spectrum ranging from fully custodial environments to fully decentralized environments. Those environments present very different reporting realities.

Patrick Camuso, CPA 11:31

And DeFi remains one of the biggest unanswered questions.

Miles Fuller 11:35

Absolutely. The broker reporting regulations addressed custodial brokers first because those entities already possess customer information and transaction records. DeFi presents a much more complicated situation. Questions emerge such as:

• Who is the reporting entity?
• What information exists?
• Who controls that information?
• What reporting obligations are technically feasible?

Those questions remain unresolved.

Patrick Camuso, CPA 12:03

Do you think some form of future DeFi reporting eventually arrives?

Miles Fuller 12:08

I think discussions will continue. The precise framework may change. The timing may change. But governments generally seek visibility into taxable activity. As DeFi adoption grows, policymakers will continue evaluating reporting approaches. The challenge will always be balancing compliance objectives against technical realities.

Patrick Camuso, CPA 12:35

That leads naturally into enforcement. Many practitioners are wondering what happens next. The IRS is now receiving substantially more information than it did several years ago. How do you think enforcement evolves?

Miles Fuller 12:50

The first thing to understand is that information reporting creates optionality. The IRS can use the information in different ways. Historically, one of the most effective compliance tools available to the agency has been automated matching. Comparing information returns against tax returns. Identifying discrepancies. Generating notices. That process already exists throughout the tax system. Digital assets are gradually entering that framework.

Patrick Camuso, CPA 13:24

Should taxpayers expect immediate enforcement action for every discrepancy?

Miles Fuller 13:29

No. Materiality matters. Resources matter. Administrative priorities matter. The IRS receives enormous amounts of information. Not every discrepancy automatically results in an examination. Not every discrepancy even results in a notice. The agency must prioritize.

Patrick Camuso, CPA 13:52

That’s an important point because some taxpayers assume any mismatch immediately triggers an audit.

Miles Fuller 13:58

That’s generally not how tax administration works. Risk assessment occurs. Materiality thresholds exist. Resource constraints exist. The IRS focuses attention where it believes the greatest compliance risk exists.

Patrick Camuso, CPA 14:19

Do you think automated matching becomes the primary enforcement mechanism?

Miles Fuller 14:24

For many situations, yes. Automated matching scales effectively. Traditional examinations are resource intensive. Information return matching allows the IRS to identify potential issues across very large populations. That’s one reason reporting systems are so important.

Patrick Camuso, CPA 14:48

And as reporting improves, those systems become more effective.

Miles Fuller 14:52

Exactly. Better information generally leads to better compliance outcomes. It helps taxpayers. It helps practitioners. And it helps tax administrators.

Patrick Camuso, CPA 15:04

One thing practitioners continue debating is audit selection. Many taxpayers assume crypto activity alone dramatically increases audit risk. Do you think that’s accurate?

Miles Fuller 15:15

Not necessarily. The IRS evaluates a wide range of factors. Transaction volume. Complexity. Income levels. Reporting consistency. Potential discrepancies. Digital assets may contribute to risk analysis. But crypto ownership by itself doesn’t automatically trigger examinations.

Patrick Camuso, CPA 15:42

So audit risk is generally driven more by reporting quality than by asset class.

Miles Fuller 15:48

That’s a reasonable way to think about it. Accurate reporting remains one of the strongest risk-reduction strategies available to taxpayers regardless of asset class.

Patrick Camuso, CPA 16:01

And as reporting becomes more structured, that principle becomes even more important.

Miles Fuller 16:06

Exactly. The transition we’re experiencing is really about moving from fragmented reporting toward standardized reporting. As that transition continues, consistency becomes increasingly valuable.

Patrick Camuso, CPA 16:24

One area we haven’t discussed yet is international reporting. While much of the industry’s attention has been focused on Form 1099-DA, there are also significant developments occurring globally. How should taxpayers and businesses be thinking about international reporting frameworks?

Miles Fuller 16:42

International reporting is becoming increasingly important. One of the most significant developments is the OECD’s Crypto-Asset Reporting Framework, commonly referred to as CARF. In many respects, CARF functions similarly to existing international information-sharing regimes. The objective is allowing tax authorities to exchange information regarding crypto asset activity across jurisdictions.

Patrick Camuso, CPA 17:09

Which means reporting is no longer simply a domestic issue.

Miles Fuller 17:13

Exactly. Digital assets are inherently global. Users operate across jurisdictions. Platforms operate across jurisdictions. Capital moves across jurisdictions. Governments recognize that reality. As a result, we’re beginning to see increasing coordination regarding reporting expectations.

Patrick Camuso, CPA 17:37

Do you expect CARF adoption to expand significantly?

Miles Fuller 17:42

I do. Implementation timelines will vary. Different jurisdictions will move at different speeds. But the broader trend is clear. Governments want greater visibility into cross-border digital asset activity. CARF is one mechanism designed to facilitate that visibility.

Patrick Camuso, CPA 18:05

And from a taxpayer perspective, that likely means increased transparency globally.

Miles Fuller 18:10

That’s a fair characterization. The long-term direction appears to be greater reporting, greater information sharing, and greater standardization.

Patrick Camuso, CPA 18:24

One thing that stands out to me is that we’re seeing multiple reporting systems developing simultaneously. 1099-DA domestically. CARF internationally. Potential future DeFi reporting. Transfer statement frameworks. It feels like the architecture is expanding rapidly.

Miles Fuller 18:43

It is. But I think it’s important to view these developments as pieces of a larger puzzle. The ultimate objective is creating reporting systems capable of supporting a maturing asset class. We’re still in relatively early stages. The infrastructure being built today will likely continue evolving for many years.

Patrick Camuso, CPA 19:07

Do you think stablecoins become a larger part of these reporting discussions moving forward?

Miles Fuller 19:13

Absolutely. Stablecoins continue growing in both usage and economic significance. As they become increasingly integrated into payments, treasury operations, and settlement infrastructure, policymakers naturally become more interested in reporting implications. That doesn’t necessarily mean dramatic new reporting requirements immediately. But I do think stablecoins remain an important area to watch.

Patrick Camuso, CPA 19:43

When you look ahead over the next several years, what do you think taxpayers should be doing right now?

Miles Fuller 19:51

The fundamentals remain remarkably consistent. Maintain records. Understand your transactions. Review information returns carefully. Reconcile discrepancies proactively. And avoid waiting until filing season to understand your activity. The taxpayers who stay organized generally have the easiest time adapting to regulatory changes.

Patrick Camuso, CPA 20:19

And for founders and platforms?

Miles Fuller 20:23

Build infrastructure with reporting in mind. Many organizations initially focus on trading functionality, user experience, and growth. Those things matter. But reporting infrastructure increasingly matters as well. The platforms that invest early tend to adapt more effectively as requirements evolve.

Patrick Camuso, CPA 20:49

One thing that’s become clear over the last several years is that crypto tax reporting is moving toward greater standardization rather than less.

Miles Fuller 20:58

I think that’s exactly right. Whether we’re discussing Form 1099-DA, transfer statements, CARF, or future reporting initiatives, the overarching trend is standardization. The details will continue evolving. The implementation will continue improving. But the direction of travel appears fairly clear.

Patrick Camuso, CPA 21:23

So perhaps the biggest mistake taxpayers can make is assuming these developments are temporary.

Miles Fuller 21:29

I would agree with that. Reporting frameworks tend to expand over time. Once information infrastructure exists, it generally becomes more refined rather than disappearing. That’s been true throughout financial reporting history.

Patrick Camuso, CPA 21:49

Miles, this has been an excellent discussion. We covered year-one lessons from Form 1099-DA, Notice 2026-20, lot identification relief, broker implementation challenges, transfer statements, DeFi reporting, IRS enforcement expectations, CARF, and the future of crypto tax compliance. Thank you for joining us again and sharing your perspective.

Miles Fuller 22:15

Thank you, Patrick. I always enjoy these conversations and appreciate the opportunity to discuss where the industry is headed.

Patrick Camuso, CPA 22:24

And thank you to everyone listening. As reporting frameworks continue evolving, taxpayers, founders, advisors, and platforms all have a stake in understanding these developments. If you enjoyed this episode, be sure to follow The Financial Frontier for future conversations at the intersection of taxation, regulation, accounting, compliance, and digital assets. Until next time, I’m Patrick Camuso, and this has been The Financial Frontier.