Reports That IRS Won’t Tax Staking Rewards Create Legal Confusion in US; UK Taxman Updates Its Own Guidance
Legal confusion has broken out in the United States after media outlets reported on a legal case whereby the Internal Revenue Service (IRS), the United States tax body, is allegedly set to refund a couple’s tezos (XTZ) crypto staking tax bill. But one prominent lawyer says the reporting around the case – which some claim could be a new landmark – amounts to “clickbait”, while others warn that this may be a settlement to avoid setting precedent.
The media outlet Blockworks claimed to have got the “scoop” on the case, which was also reported by Forbes. They claimed that “in court filings expected to be made public Thursday,” the IRS was set to “refund USD 3,293 in income tax plus statutory interest” to a couple based in Nashville. The duo, named Joshua and Jessica Jarrett, had been forced to pay the aforementioned amount on the XTZ 8,876 they had obtained via staking.
The couple had paid but objected to the bill – and in May last year took their case to the civil courts claiming that tokens acquired through proof-of-stake (PoS) methods were in fact “new” forms of “property” rather than conventional “income.” Unless they are converted into a “readily accessible form of wealth,” the couple had claimed “no taxable event has occurred” in the eyes of the IRS.
However, the confusion appears to have arisen in the IRS’ alleged response – which will not be made public until later today. Blockworks claimed that the IRS “has offered to refund” the Jarretts, in what appears to be a legal settlement, rather than an official ruling.
The same media outlet added that the “decision” was “set to clarify the tax treatment of staked cryptocurrency.”
It claimed that the decision was a “win for cryptocurrency stakers and miners.”
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