This blog was last updated on February 5, 2025
Reporting digital asset transactions on Form 1099-DA just got a little more complicated. For 2025 transactions, crypto brokers that file Form 1099-DA with the IRS will be required to file the 1099-DA with the State of Montana. This makes Montana the first state to introduce a 1099-DA reporting requirement in its guidance.
For background, every state has specific laws that require information reporting of W-2s, 1099’, and other returns by businesses. Some states require 1099 reporting following the IRS formats, thresholds and due dates—but many states do not.
To alleviate the burden on businesses, the IRS’s Combined Federal State Filing (CF/SF) program by allowing a business to include in their federal file, state income tax and state withholding tax data and the IRS shares that information with the states, for free.
While the IRS has good intentions with the CF/SF, the program has some major flaws. For starters, the IRS doesn’t include all information returns in the program, so businesses that issue certain returns not included still need to create separate files and submit information directly to the state. Additionally, there are states that do not participate in the CF/SF, so businesses always need to file information directly in those state systems. Adding even more complexity, there are states that are listed as participating in the CF/SF but still require businesses to submit information directly in their portals.
Montana is a great example of these complexities. Montana is listed as a participating state in the IRS’s CF/SF program. However, the CF/SF will not satisfy the states filing requirements because Montana requires businesses to create separate files and submit the 1099 information directly in their portal. Additionally, Montana requires information reporting following varying thresholds depending on the return. For example, Form 1099-B (which reports transaction level trading of traditional securities and commodities by brokers) is required to be reported to Montana following a de minimis $600 threshold even though there is no threshold for reporting Form 1099-B to the IRS.
The final version of IRS Form 1099-DA includes boxes for reporting state income and state tax withholding which signals the IRS’s intention to include the form in the CF/SF program. However, neither the IRS nor the State of Montana has published electronic filing requirements for filing 2025 versions of Forms 1099-DA, so we’ll have to wait and see.
Stay ahead of evolving state reporting requirements. Sovos continuously monitors direct state filing mandates to help businesses stay compliant. Explore our Direct State Reporting Map for the latest updates on where and how to file.
