Tezos users sue the IRS for crypto-tax rules

A Nashville couple sued the Internal Revenue Service Wednesday, claiming the refund of thousands of dollars paid to the agency as a result of obtaining tokens to maintain the Tezos blockchain. The situation has significant ramifications for the wider crypto industry as more and more blockchains, including Ethereum, are transitioning to a Tezos-like system, a model known as proof-of-risk. Giving tokens to those who already own them. and use them to update the blockchain. In a lawsuit filed in Tennessee federal court, Joshua and Jessica Jarrett claim that they paid the IRS $ 3,293 in 2019 after receiving 8,876 Tezos tokens. The couple then requested a refund on the grounds that the tokens received for computing power credit to the Tezos network should not be taxed until they are sold or traded. What's in question According to Jarretts, current IRS rules do not allow taxation of cryptocurrency earned by a strike. The couple say that the tokens should not be viewed as wages or income because they earned them from a decentralized network, not from an employer. They also compare their efforts with other professions that create something. "Like a baker who bakes cakes with ingredients and an oven, or a writer who writes a book using Microsoft Word and a computer, Mr. Jarrett created the property," the complaint says. The likelihood that the case will be successful is uncertain, as this is largely a new legal basis, and the IRS tax code is completely silent about the cryptocurrency's treatment. The agency has published a series of guidelines, and while it has become more aggressive in its search for crypto income (it posted a crypto question on the front page of Everyone's Annual Tax Form this year), it adopted no rules for new directions. Growing crypto industry including fasting staking. How the IRS Tax Rules Can Be Applied to Ethereum 2.0 This week's case is sponsored by an organization called the Proof of Stake Alliance.

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