Why it matters
Does this touch crypto yet? Not quite. In principle a broker filing Form 1099-DA could hold back part of what you get from a sale, as a stock broker can on Form 1099-B. In practice the IRS has pushed the start back twice, and the latest delay, Notice 2025-33, covers every digital asset sale a broker makes in 2025 and 2026.
The following year brings a softer landing than you might expect. For customers who already had accounts, brokers can use a taxpayer number that was never formally certified, as long as it matches the name the IRS has. So the practical step is dull but worth doing: when a broker asks for your number, give the right one.
Example
Say a payment of $1,000 is subject to backup withholding. At the 24% rate given on the IRS backup withholding page, the payer keeps $240 for the IRS and pays out $760. The $240 appears on the Form 1099 you receive.
What to watch for
Withheld tax isn’t lost. Under IRS Topic 307, you report an amount shown as backup withholding on your Form 1099 “as federal income tax withheld on your income tax return for the year you received the income.”