On June 12, 2025, the U.S. Department of the Treasury and the IRS issued Notice 2025-33, extending certain transitional relief originally provided for digital asset sales. In particular, the Notice states that no backup withholding will be required on digital asset sales in both 2025 and 2026. Originally the IRS only provided relief in 2025. This Notice does not extend the upcoming Form 1099-DA filing in early 2026.
Notice 2025-33 Provides the Following:
Extended Backup-Withholding Relief for 2026
The IRS has extended the 2025 relief of backup withholding on sales of digital asset sales for an additional year. Accordingly, digital asset brokers now have through 2026 to address this issue.
Backup Withholding Considerations in 2027
Tax year 2027 transactions that involve a sale of a digital asset for a different digital asset (other than an NFT), will have backup withholding limited to 24% of the amount the broker receives upon liquidation, not 24% of the value at the time of the transaction, even though it may be less than 24% of the digital assets the customer receives.
Preexisting Customers & Uncertified TIN Relief
The IRS provided digital asset brokers one additional year of relief with respect to obtaining certified tax identification numbers (TINs) for pre-existing customers. For preexisting customer accounts (opened before January 1, 2026), brokers will not be required to backup withhold on 2027 transactions if they submit the customer’s name and Taxpayer Identification Number (TIN) to the IRS TIN Matching Program and receive a “match” response.
It is important to note that digital asset brokers must still collect certified TINs via Forms W-9 starting on January 1, 2026 for new customers, and for any customer that does not have a Name/TIN match.
Non-U.S. Customer Treatment
The IRS has also granted the industry additional time to obtain documentation from preexisting accounts to properly classify those accounts as exempt foreign persons. For accounts established before January 1, 2026, not previously classified as U.S. persons, and includes a Non-US residence address on file – brokers have relief from penalties for failure to file Forms 1099-DA, and backup withholding for sales effected in 2027.
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