SHERIDAN, Wyo., April 23, 2025 (GLOBE NEWSWIRE) -- A multi-year investigation by crypto tax experts revealed pervasive, critical flaws in the current crypto tax reporting ecosystem in a newly published report, warning of dire consequences for traders, investors, and miners as the IRS prepares to enforce new 1099-DA regulations.
Researchers at DeFi Tax conducted an extensive, multi-year effort involving data validation, platform testing, and direct engagement with regulatory bodies. Their findings point to a widespread “systemic failure” across popular crypto tax platforms, including IRS-endorsed tools, in accurately calculating gains, losses, and taxable income.
Crypto Tax Tools Falling Short
From 2021 to 2024, DeFi Tax researchers manually reviewed hundreds of transactions using raw blockchain data and IRS cost accounting rules. Their analysis uncovered consistent miscalculations by leading platforms. These issues stem from incomplete data collection, flawed asset disposal methodologies, and incorrect transaction classifications.
Mainstream exchanges will likely further complicate matters when they issue inaccurate or contradictory 1099 forms, resulting in users unknowingly submitting false income tax returns.
“None of the platforms we reviewed could produce audit-ready reports with consistent accuracy,” said Janna Scott, Head of DeFi Tax. “This exposes taxpayers to enormous financial and legal risk.”
Scott reports that despite concerted outreach efforts to multiple crypto tax platforms and exchanges in an effort to sound the alarm, the responses were either dismissive or entirely absent. She explains that in mid-2023 many of the solutions quietly made tweaks to their algorithms in response to the feedback, but adds that these changes did not correct the errors. They did, however, change the numbers for all previous reports without ever informing their clients.
She adds that while federal agencies, including the SEC and IRS, acknowledged the accuracy of DeFi’s findings in multiple lengthy private meetings, they took no public action and instead contracted with a third-party provider to assist with crypto tracing, sidestepping the tax compliance issue altogether. They also tacitly acknowledged the strength of the research by suspending crypto audits in 2023 and 2024.
Unfortunately, one of the largest exchanges did not respond to DeFi Tax’s recent detailed Request for Comment. Coincidentally, however, that exchange did take action within 24 hours to update its terms of service, attempting to bar users of the platform from participating in class action lawsuits against the company. Tellingly, a search of our available records revealed that this is the first such emailed terms update for this exchange since prior to 2017.
Taxpayers Defenseless against Billions of Faulty 1099-DA Forms
As the IRS mandates new 1099-DA forms for 2025, it is clear that platforms are poised to distribute billions of documents, most of which are expected to be severely flawed. Worse, upon receiving one of these flawed 1099-DA forms, users of the exchanges will be faced with limited support, no clear mechanisms for correction, and very little accountability from the issuers. Alone, with nothing but their faulty DA-1099s and the unreliable data printed thereon, taxpayers will face audits they are guaranteed to fail, with automatic penalties and even criminal prosecution all but assured..
“It’s a perfect storm,” said Scott. “The IRS is arming itself with flawed data and aggressive enforcement tools, while taxpayers are left with platforms that can’t get it right.”
The Solution: A Transparent, Immutable, Blockchain-Driven Platform
To address these systemic vulnerabilities in crypto tax reporting, DeFi Tax has developed a groundbreaking, blockchain-driven platform that draws immutable data directly from APIs, eliminating the possibility of transaction manipulation and generating audit-ready reports.
This solution has been independently reviewed and validated by leading university professors who help shape national crypto tax policy, reinforcing its accuracy and integrity.
With billions in taxpayer dollars at stake and the 1099-DA form rollout approaching, DeFi Tax is calling on regulators, policymakers, and journalists to scrutinize the crypto tax software ecosystem before taxpayers begin to pay the consequences for the negligence of others.
Join the DeFi Tax waitlist today and be part of a solution built for transparency, security, and accountability.
About DeFi Tax:
DeFi Tax is a groundbreaking tax software platform created to address the widespread inaccuracies of digital asset tax filing tools. By utilizing rigorously validated blockchain data and custom-built APIs, DeFi Tax offers an audit defense guarantee and eliminates the inaccuracies commonly found in all the currently available mainstream tax solutions for digital asset trading. DeFi Tax supports individuals, businesses, and accountants with audit-proof reports, smart categorization of transactions (like NFTs and staking), and unmatched precision and legal compliance. DeFi Tax is the go-to solution for anyone looking to navigate the world of crypto taxes with confidence and transparency. Visit defitax.us to learn more.
Contact:
Mark Crawford
