According to recent IRS moves, the regulators there are understanding how Bitcoin miners and validators, as well as hardware and software sellers, are different from the average crypto investor.
In 2021, a bill signed by President Biden required reporting for any crypto transactions over $10,000 on annual returns.
Lately, a particular case of tax litigation seems to show that the IRS might exempt these other parties from the same requirements.
Specifically, a couple who paid taxes on staked crypto got a $3000 refund from the IRS after legal challenges.
Rachel Wolfson at Cointelegraph reports that “the Jarretts” (not identified by their first names) are still pursuing resolution for the issue.
“The couple is working with a team of savvy lawyers while also receiving support from the Proof of Stake Alliance (POSA), which is an industry advocacy group,” writes Wolfson, citing information from attorneys. “Given this, the Jarrett’s recently released a statement indicating their goal to have the IRS clarify its position on taxing staking and block rewards ‘for both proof-of-stake and proof-of-work’ systems. … This is important since no clear guidance currently exists for taxing unclaimed staking rewards. As of now, the IRS only asks taxpayers whether they have ‘received, sold, exchanged or otherwise disposed of any financial interest in any virtual currency.’”
“This is huge, as POSA has been working on this issue since we started almost three years ago,” Alison Smith Mangiero, a member of the POSA board of directors and president and founder of Tocqueville Group, according to Wolfson’s coverage. “This is an argument backed by over 100 years of tax law, and it’s important for people to understand this is a viable position,” she said.
Meanwhile, the SEC is hitting crypto lending operations pretty hard, even before they are in operation. Some attempts by major exchanges never happened, because the SEC went after them before they were implemented at all.
Anyway, all of this can be massively confusing for crypto investors who don’t know exactly how to file. Look for more change as U.S. agencies attempt to find balance in regulating crypto assets.
