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Sovos Cryptocurrency Tax Compliance

Crypto Tax Software for Businesses, Complete Compliance Without Gaps

Description

From tax IDs to cost basis to 1099-DAs, every step of crypto tax compliance is covered in one connected solution built for accuracy, scale, and confidence.

Leverage a proven solution

With nearly 40 years of expertise in information reporting, Sovos processes hundreds of millions of tax forms each year for over 30,000 customers. Since 2008, we have been a trusted partner in broker transaction reporting, seamlessly expanding into digital asset reporting to ensure compliance across all asset types.

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Benefits of Sovos Crypto Tax Reporting

Compliance without gapsAll the moving pieces connected in one place. Tax ID verifications, cost basis tracking, and 1099-DA reporting working together so you get compliance right the first time.Reduced Risk of Penalties and WithholdingCompliance done right, so you don’t pay the price with costly penalties, backup withholding, or regulators questioning your reporting accuracy.Efficiency and Scalability from Day OneScale reporting without scaling your workload. Automation takes care of the heavy lifting so your team can focus on growth, not busywork.
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See how Sovos Crypto Tax Reporting delivers complete crypto tax compliance with one connected solution built for accuracy, scale, and confidence.
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“Sovos takes away the complicated guesswork of crypto tax reporting, helping us and our clients to be compliant.”

Andrew Chang

COO, Paxos

Smarter Way to Handle Crypto Tax Compliance – Here’s How

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Cost Basis Without Compromise

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Handle the complexities of digital asset cost basis including transfers, swaps, and staking while also supporting traditional securities, bringing both sets of data together for accurate, complete reporting.

Frequently Asked Questions

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Yes, Sovos 1099 Reporting supports all federal and state filing requirements, even as they evolve leading up to the reporting deadline.

Form 1099-DA is being built exclusively on IRIS, the IRS’s new filing system, and is not supported on the legacy FIRE system. Since all 1099-DA filers must use IRIS, it makes sense to consolidate filing for all available form types on the same platform. The primary form not yet available on IRIS is Form 1042-S, but development for it began in early 2025.

State reporting requirements for Form 1099-DA are still evolving, and new states may introduce requirements up until the filing deadline. To stay up to date, visit our State Reporting Guide for the latest information.

Penalties for 1099-DA filings are the same as other 1099 forms. Beginning with tax year 2026, 1099-DA will be subject to backup withholding, meaning enforcement of missing or incorrect name/TIN combinations will begin then. Incorrect name/TIN combinations for 2025 filings may result in penalties of $340 per incorrect record. Learn more about penalties here.

Once data is added to the system, it goes through multiple validations, including IRS-specific checks. These validations ensure all required fields are populated, addresses are formatted correctly, and IRS rules—such as code and percentage combinations—are followed. This helps prevent errors before submission.

Once a record is filed with the IRS, any updates are considered corrections. Sovos supports all federal corrections and amendments, including generating corrected statements and filing updates with the IRS.

In the Sovos Crypto Tax platform, W-8 and W-9 collection is seamlessly integrated into the workflow. Our e-solicitation and IRS validations ensure that new or updated information flows directly into reporting processes, delivering accurate recipient data and protection against penalties and backup withholding.

Sovos’ Crypto Tax platform natively ingests transaction, proceeds, and cost basis data and ties it together with demographic information to produce fully compliant 1099 forms. Our flexible data model allows us to integrate cost basis details from multiple sources, reconcile the information, and generate accurate tax outputs at scale.

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