1099-DA, IRS Enforcement, and the Future of Crypto Tax Reporting with Miles Fuller

A conversation with Miles Fuller, Head of Government Solutions at TaxBit and former IRS Office of Chief Counsel attorney, discussing Form 1099-DA, digital asset reporting infrastructure, IRS enforcement, wallet-by-wallet accounting, stablecoin reporting, DeFi broker regulations, and the future of crypto tax compliance. Host: Patrick Camuso, CPA, Camuso CPA Guest: Miles Fuller, Head 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. Portions affected by automated transcription limitations have been clarified where context made the intended meaning clear. The substance of the conversation has been preserved.

Transcript

Patrick Camuso, CPA 00:07

Welcome to the latest episode of The Financial Frontier. I’m your host, Patrick Camuso. The IRS’s new Form 1099-DA marks the beginning of a formal reporting regime that will permanently connect cryptocurrency activity to the U.S. tax reporting system. To help us understand what that means, I’m joined by Miles Fuller, Head of Government Solutions at TaxBit and a former attorney with the IRS Office of Chief Counsel. Miles spent more than fifteen years at the IRS before joining TaxBit and now works directly with exchanges, financial institutions, and government agencies implementing digital asset reporting infrastructure. Miles, welcome to the show.

Miles Fuller 00:54

Thanks for having me, Patrick. I’m excited to talk about 1099-DA, crypto compliance, and where digital asset reporting is headed.

Patrick Camuso, CPA 01:05

You spent over fifteen years inside the IRS Office of Chief Counsel before joining TaxBit. How has that experience shaped your perspective on digital assets and the IRS’s approach to crypto taxation?

Miles Fuller 01:19

Quite a bit. My role inside Chief Counsel primarily involved examinations and litigation. I worked with IRS exam teams, handled tax controversy matters, and spent a significant amount of time in tax court. One of my specialty areas involved abusive tax avoidance transactions. When cryptocurrency began gaining traction, it naturally attracted attention because it was a new asset class and there were concerns regarding compliance and enforcement. Over time, I became involved in helping the IRS understand digital assets from a tax perspective:

• How audits should be conducted
• How transaction data should be analyzed
• How gains and losses should be calculated
• How existing tax principles apply to emerging technologies

What was interesting is that many of the challenges we faced at the IRS were the exact same challenges practitioners face today.

Patrick Camuso, CPA 02:16

Meaning the data problem.

Miles Fuller 02:19

Exactly. Whether you’re an IRS examiner or a CPA working with a client, the first challenge is obtaining complete transaction data. The second challenge is determining what that data actually means. The third challenge is applying the appropriate tax rules. A taxpayer might have activity on multiple exchanges, multiple wallets, and various DeFi protocols. Before you can even begin calculating tax consequences, you need to understand what economically occurred. That remains one of the industry’s biggest challenges.

Patrick Camuso, CPA 02:57

It’s something we see every day. Many of our clients have activity spanning years across exchanges that no longer exist, self-custody wallets, and multiple blockchain ecosystems. The reconstruction process can become extremely complex.

Miles Fuller 03:11

Absolutely. And that’s one of the reasons reporting initiatives like 1099-DA were created. The IRS continues to cite substantial non-compliance rates within digital assets. Part of that is intentional non-compliance. But part of it is simply complexity. The information isn’t always easy to obtain or interpret.

Patrick Camuso, CPA 03:35

From your perspective, what is Form 1099-DA actually trying to accomplish?

Miles Fuller 03:41

I think it accomplishes two primary objectives. First, it helps standardize data. Historically, crypto transaction reporting has been fragmented. Every exchange had different exports. Different formats. Different levels of detail. Different assumptions. 1099-DA introduces a standardized reporting framework that resembles what taxpayers already experience with traditional brokerage reporting. Second, it increases transparency. Taxpayers receive better information. The IRS receives better information. And both parties can reconcile against the same data set.

Patrick Camuso, CPA 04:22

So in some ways it’s reducing friction for compliant taxpayers while simultaneously improving enforcement capabilities.

Miles Fuller 04:29

Exactly. One thing I think people overlook is that reporting doesn’t just help identify non-compliance. It also helps identify compliance. Historically, we’ve seen situations where taxpayers received IRS notices despite having reported correctly. Better information reduces those situations as well. Ideally, it allows the IRS to focus resources on actual reporting issues rather than creating unnecessary friction for compliant taxpayers.

Patrick Camuso, CPA 05:02

One thing many practitioners describe is that 1099-DA is ultimately a data infrastructure challenge.

Miles Fuller 05:09

That’s exactly how I think about it. This is fundamentally a data problem. The tax reporting is simply the output. The real challenge is collecting, normalizing, validating, and transmitting massive amounts of transaction data in a consistent format. And that requires significant investment by exchanges, custodians, and reporting platforms.

Patrick Camuso, CPA 05:38

Which is exactly where TaxBit operates.

Miles Fuller 05:41

Correct. A large portion of our work involves helping organizations build the infrastructure necessary to comply with these requirements. Because many existing systems weren’t originally designed with tax reporting as a primary objective. They were designed to facilitate trading. Now those same systems must support large-scale tax reporting. That requires substantial architectural changes.

Patrick Camuso, CPA 06:09

And those changes aren’t limited to the platforms themselves. The IRS also has to process the information.

Miles Fuller 06:15

Exactly. When people think about 1099-DA, they often focus on exchanges. But the IRS is also preparing for an unprecedented volume of information returns. There have been estimates ranging from several billion forms over time. Managing, storing, and utilizing that information creates significant challenges on the government side as well.

Patrick Camuso, CPA 06:43

One benefit I do see is increased standardization. For years, practitioners have dealt with inconsistent exchange exports.

Miles Fuller 06:51

I agree. One of the secondary benefits of 1099-DA may be a convergence toward common data standards. And that’s something I think will benefit the entire industry.

Patrick Camuso, CPA 07:12

One of the most significant developments accompanying Form 1099-DA is Revenue Procedure 2024-28. For years, many taxpayers relied on universal accounting methods that treated digital assets as part of a single aggregated pool. Now we’re moving toward wallet-by-wallet accounting. Can you explain what changed and why it matters?

Miles Fuller 07:37

Absolutely. Historically, there was substantial uncertainty regarding how taxpayers should identify units of digital assets when assets were transferred between wallets. Many taxpayers effectively applied a universal accounting approach. In other words, they viewed all units of a particular asset as belonging to a single inventory pool regardless of where those assets were held. Revenue Procedure 2024-28 moves away from that framework. The IRS has made it clear that taxpayers should track digital assets on a wallet-by-wallet basis. That means each wallet effectively maintains its own basis history and acquisition history.

Patrick Camuso, CPA 08:25

And that’s a significant operational change.

Miles Fuller 08:29

It is. From a compliance perspective, it creates a more structured framework. But it also creates additional recordkeeping obligations. Taxpayers must now understand:

• Which wallet received the asset
• When it was received
• How much basis transferred
• Which specific units moved

That level of granularity becomes much more important.

Patrick Camuso, CPA 08:55

For practitioners, one of the biggest questions is how that applies across different blockchain architectures. Not every blockchain functions the same way.

Miles Fuller 09:06

That’s exactly right. There are meaningful differences between UTXO-based systems and account-based systems. Bitcoin is a good example of a UTXO model. Ethereum is generally considered account-based. The mechanics of tracing assets differ substantially between those environments. That’s one reason why implementation becomes challenging. The tax rules may appear straightforward conceptually. But translating those rules into software systems can be very complex.

Patrick Camuso, CPA 09:42

And complexity increases even further when self-custody enters the picture.

Miles Fuller 09:48

Absolutely. Self-custody creates unique challenges because the taxpayer ultimately controls the records. With centralized exchanges, information reporting can help bridge some of the gaps. With self-custody wallets, taxpayers often bear much greater responsibility for maintaining complete records. That’s one reason why accurate wallet tracking becomes increasingly important.

Patrick Camuso, CPA 10:14

One question I hear frequently concerns non-custodial wallets. How does the IRS view those environments from a reporting perspective?

Miles Fuller 10:23

That’s still an evolving area. The IRS has provided guidance in certain respects, but there remain practical questions regarding information reporting and basis continuity when assets move through self-custody environments. The challenge is balancing tax administration objectives with technological realities. In many cases, the relevant information simply isn’t available to third parties. That’s part of what makes this area so complicated.

Patrick Camuso, CPA 10:57

Which brings us back to the broader theme that crypto taxation is often a data problem first and a tax problem second.

Miles Fuller 11:05

Exactly. The tax rules themselves are often relatively straightforward. The difficulty lies in obtaining reliable data and applying those rules consistently. Without good data, even simple tax principles become difficult to implement.

Patrick Camuso, CPA 11:22

Another topic receiving increased attention is stablecoins. As stablecoin adoption continues growing, do you think taxpayers underestimate the reporting implications?

Miles Fuller 11:34

In some cases, yes. Many people view stablecoins as cash equivalents from a practical perspective. But under current tax rules, stablecoins remain digital assets. That means dispositions can potentially generate taxable events. Now, the gains or losses may often be small. But from a reporting standpoint, those transactions still exist. As adoption expands, policymakers may eventually revisit how certain stablecoin transactions are treated. But today, taxpayers still need to account for them.

Patrick Camuso, CPA 12:10

And stablecoins are becoming increasingly integrated into payments, settlement, and treasury operations.

Miles Fuller 12:17

Exactly. The more widely stablecoins are used, the more important these reporting questions become. It’s one thing when stablecoins are primarily used by traders. It’s another when businesses begin using them for routine operational activities. That’s where reporting complexity can scale very quickly.

Patrick Camuso, CPA 12:40

Do you think taxpayers generally appreciate the compliance burden associated with these new reporting frameworks?

Miles Fuller 12:48

I think many do now. A few years ago, perhaps not. But as reporting requirements become more formalized, awareness has increased significantly. Most sophisticated investors understand that digital assets are moving toward a reporting environment that increasingly resembles traditional finance. The challenge is adapting systems and processes to support that transition.

Patrick Camuso, CPA 13:17

And that adaptation isn’t limited to taxpayers. It affects exchanges, custodians, software providers, advisors, and regulators as well.

Miles Fuller 13:25

Exactly. This is an ecosystem-wide transition. Everyone is adjusting simultaneously. The platforms are adjusting. The IRS is adjusting. Practitioners are adjusting. Taxpayers are adjusting. That’s part of what makes this period so interesting. We’re watching an entirely new reporting infrastructure emerge in real time.

Patrick Camuso, CPA 13:44

One of the most common questions practitioners ask is how Form 1099-DA will affect IRS enforcement. Historically, many digital asset audits required substantial manual reconstruction because the IRS often lacked complete third-party reporting. How does that change once reporting becomes more standardized?

Miles Fuller 14:03

The biggest change is efficiency. Historically, digital asset examinations often began with significant uncertainty. The IRS might know a taxpayer engaged in cryptocurrency activity, but obtaining complete records could be challenging. Examiners frequently had to rely on exchange summonses, voluntary disclosures, taxpayer-provided records, or blockchain analysis. That process can be time-consuming. Information reporting fundamentally changes that dynamic.

Patrick Camuso, CPA 14:38

Because now the IRS begins with a baseline data set.

Miles Fuller 14:42

Exactly. The IRS will increasingly receive information returns directly from reporting entities. That allows the agency to perform matching activities similar to those already used for traditional brokerage reporting. Historically, information reporting has been one of the most effective compliance tools available to the IRS. There’s extensive research demonstrating that voluntary compliance increases dramatically when taxpayers know information is being reported independently.

Patrick Camuso, CPA 15:12

We’ve seen that throughout the tax system. W-2 reporting. 1099 reporting. Brokerage reporting. The pattern is fairly consistent.

Miles Fuller 15:20

Exactly. Information reporting creates transparency. And transparency generally improves compliance. That’s one of the primary reasons governments around the world continue expanding information reporting frameworks.

Patrick Camuso, CPA 15:36

What do you think examinations look like in a post-1099-DA environment?

Miles Fuller 15:43

I think they become more targeted. Historically, some digital asset examinations focused heavily on determining whether activity existed at all. Going forward, the focus may increasingly shift toward reconciliation. Do reported proceeds align with information returns? Do cost basis calculations appear reasonable? Are there material discrepancies? Are there unexplained differences? The nature of the examination changes.

Patrick Camuso, CPA 16:16

So instead of searching for information, the IRS is increasingly validating information.

Miles Fuller 16:22

That’s a good way to describe it. The information returns provide a starting point. The examiner can then focus attention on areas that appear inconsistent or incomplete.

Patrick Camuso, CPA 16:35

One thing practitioners worry about is false positives. We’ve already seen situations where taxpayers receive notices because the IRS has incomplete information.

Miles Fuller 16:45

That’s certainly something policymakers are aware of. No reporting system is perfect. There will always be situations where additional context is required. For example:

• Wallet transfers
• Internal account transfers
• Cost basis discrepancies
• Missing acquisition data

Information returns don’t necessarily tell the entire story. That’s one reason why recordkeeping remains critically important.

Patrick Camuso, CPA 17:16

Which brings us to audit readiness. What should taxpayers be doing today to prepare?

Miles Fuller 17:23

The answer is actually fairly straightforward. Maintain records. Document transfers. Retain transaction histories. Understand where your assets are held. Understand how your gains and losses are calculated. And perhaps most importantly, reconcile information before filing. Don’t assume third-party reports are automatically correct. Review them. Validate them. And address discrepancies proactively.

Patrick Camuso, CPA 17:56

That’s particularly important because crypto activity often spans multiple platforms.

Miles Fuller 18:01

Exactly. A single taxpayer may receive information from multiple sources. Those sources may not always have complete visibility into the taxpayer’s activity. That’s where professional review becomes valuable.

Patrick Camuso, CPA 18:16

Do you think taxpayers underestimate how important basis tracking has become?

Miles Fuller 18:23

In some cases, yes. Many taxpayers focus primarily on proceeds. But basis is often where the real complexity exists. Determining acquisition history. Tracking transfers. Applying identification methods. Maintaining continuity. Those processes become increasingly important as reporting frameworks mature.

Patrick Camuso, CPA 18:49

And that’s particularly true now that wallet-level tracking is becoming more important.

Miles Fuller 18:55

Exactly. The more granular the reporting environment becomes, the more important granular recordkeeping becomes. Those concepts go hand in hand.

Patrick Camuso, CPA 19:08

When you look five years into the future, do you think crypto examinations begin resembling traditional securities examinations?

Miles Fuller 19:17

In many respects, yes. The asset class remains unique. The technology remains unique. But the reporting framework is moving toward a more familiar model. Information reporting. Matching programs. Standardized data. Structured compliance processes. Those developments gradually reduce the distinction between digital assets and other financial assets from a tax administration perspective.

Patrick Camuso, CPA 19:49

Which ultimately reflects the maturation of the industry itself.

Miles Fuller 19:54

Exactly. As markets mature, reporting matures. As reporting matures, compliance matures. And as compliance matures, enforcement becomes more efficient. That’s a progression we’ve seen repeatedly throughout financial history.

Patrick Camuso, CPA 20:12

One of the most heavily debated topics over the last several years has been DeFi reporting. The broker regulations originally included provisions that many participants believed could eventually extend into decentralized finance environments. Where do you think that conversation goes from here?

Miles Fuller 20:31

I think it’s important to separate technology from policy objectives. The policy objective remains relatively consistent: Governments want greater visibility into taxable activity. That’s unlikely to change. The challenge is determining how reporting can be implemented in environments that operate very differently from traditional financial institutions. In centralized environments, identifying reporting entities is often straightforward. In decentralized environments, those questions become much more complicated.

Patrick Camuso, CPA 21:07

Because there may not be a traditional intermediary.

Miles Fuller 21:11

Exactly. Many DeFi systems were designed specifically to minimize reliance on centralized intermediaries. That creates important policy questions. Who has access to the information? Who controls the information? Who can reasonably be expected to report the information? Those aren’t always simple questions.

Patrick Camuso, CPA 21:34

Do you think some form of DeFi reporting eventually emerges?

Miles Fuller 21:40

I think policymakers will continue exploring it. The precise framework may evolve. The specific implementation may evolve. But I would be surprised if reporting discussions disappear entirely. Digital asset activity represents a meaningful and growing portion of economic activity. As that activity expands, governments naturally become interested in reporting mechanisms.

Patrick Camuso, CPA 22:06

Another recurring theme throughout crypto has been privacy. How do you think privacy and compliance coexist moving forward?

Miles Fuller 22:15

I don’t necessarily view them as mutually exclusive. Most financial systems already balance privacy interests against compliance obligations. The challenge is finding practical implementations. Individuals want privacy. Governments want compliance. Businesses want operational simplicity. The most successful frameworks generally attempt to balance all three objectives.

Patrick Camuso, CPA 22:46

Do you think on-chain identity becomes a larger part of that conversation?

Miles Fuller 22:52

Potentially. There are numerous projects exploring identity solutions. Some focus on privacy-preserving identity. Others focus on credential verification. Others focus on regulatory compliance. I think we’re still very early in that evolution. But identity infrastructure could become increasingly important as digital asset ecosystems mature.

Patrick Camuso, CPA 23:21

One thing that strikes me is that we’re really discussing the future architecture of financial reporting.

Miles Fuller 23:28

That’s exactly right. Sometimes people think about 1099-DA as simply another tax form. In reality, it’s part of a much broader transition. We’re building reporting infrastructure for an entirely new asset class. And infrastructure decisions tend to have long-lasting effects. The systems being built today may influence reporting for decades.

Patrick Camuso, CPA 23:58

When you look ahead five to ten years, what does the reporting environment look like?

Miles Fuller 24:05

I think several trends continue. First, greater standardization. Second, greater automation. Third, improved data quality. Fourth, more seamless integration between financial systems, reporting systems, and compliance systems. The long-term direction seems fairly clear. The mechanics may evolve, but the trend toward structured reporting is likely to continue.

Patrick Camuso, CPA 24:37

And for founders building in this space today?

Miles Fuller 24:42

My advice is simple: Build reporting considerations into your systems early. Don’t assume reporting can be added later without significant cost. The organizations that think proactively about compliance architecture generally have much smoother transitions when new requirements emerge.

Patrick Camuso, CPA 25:03

And for investors?

Miles Fuller 25:07

Maintain records. Understand your activity. Review information returns carefully. And don’t wait until tax season to determine whether your records are complete. The sooner issues are identified, the easier they are to resolve.

Patrick Camuso, CPA 25:28

One thing I’ve noticed is that many investors still view digital asset taxation as temporary complexity. As though eventually the rules will become simpler.

Miles Fuller 25:39

Some aspects may become simpler. But complexity often accompanies financial innovation. What’s more likely is that the tools improve. The reporting improves. The infrastructure improves. And compliance becomes easier because the systems become better. That’s generally how mature financial markets evolve.

Patrick Camuso, CPA 26:04

So the future isn’t necessarily less reporting. It’s better reporting.

Miles Fuller 26:09

Exactly. Better information. Better systems. Better transparency. Those developments tend to benefit taxpayers, regulators, and markets alike.

Patrick Camuso, CPA 26:23

Miles, this has been an outstanding discussion. We covered Form 1099-DA, Revenue Procedure 2024-28, wallet-by-wallet accounting, stablecoin reporting, IRS enforcement, audit readiness, DeFi reporting, and the future of digital asset compliance. Thank you for joining us and sharing your perspective.

Miles Fuller 26:46

Thank you, Patrick. I appreciate the opportunity and enjoyed the conversation.

Patrick Camuso, CPA 26:52

And thank you to everyone listening. As digital asset reporting continues evolving, staying informed is more important than ever. If you enjoyed this episode, be sure to follow The Financial Frontier for future conversations at the intersection of taxation, accounting, regulation, and digital assets. Until next time, I’m Patrick Camuso, and this has been The Financial Frontier.