Josh Jarret’s legal battle with the IRS will give Americans the certainty they need on crypto taxes.
Binding Precedent
In a tweet by Joshua Jarrett, one of the Plaintiffs in the federal litigation of Joshua & Jessica Jarrett v. United States, disclosed an offer for settlement by the Department of Justice that was declined. Joshua Jarrett said,
‘But I refused the offer, because I know that until my case receives an official ruling, I have no certainty they won’t try to tax me again.’
The ongoing litigation will set the precedent for future treatment of staking rewards, which the Jarretts argued should only be taxed when the new tokens are sold. The amount of $3,793 was paid but he subsequently filed for a refund in August 2000.
The offer to refund the paid amount is suggestive of the fact that the Internal Revenue Service (IRS) is conceding to the fact that staking rewards are created ‘properties’ and should be treated like the bread baked by the baker or the novel written by the author.
Clarity Needed
Tax treatments for crypto-based assets remain an area that is in much need of clarity. Authorities are similarly confused about classifying the various types of revenues generated through crypto activities.
Legal obligations should only be imposed if there is clarity on the perimeters of the obligations. The IRS has failed to provide a definitive guideline on the treatment of staking rewards except through a notice issued in 2014, that sought to treat mining rewards as a trade or business for taxation purposes.
Staking is a growing segment of the crypto market. The lack of clarity forces many law-abiding taxpayers to adopt a conservative approach by reporting these rewards as income when it is received.
Evolving Landscape
The regulatory uncertainty is best resolved through Congress by enacting new laws. The other alternative is to refer the dispute to courts for a ruling that will set the precedent for future cases. The Jarretts’ decision to force a ruling will benefit millions of taxpayers caught in a similar predicament.
A new bipartisan bill titled ‘Virtual Currency Tax Fairness Act of 2022’ is reintroduced in Congress to exempt tax on transactions below $200. Lawmakers are starting to recognize that the present tax code is no longer evolving with the changing times.
source : bsc.news
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