The head of communications at TaxBit explained that the media misinterpreted the court’s conclusion in the case of the Jarretts and the US Internal Revenue Service (IRS).
TaxBit’s head of government, SME relations, Seth Wilks, told Cointelegraph that a lot of misinformation has been circulated regarding the lawsuit:
“The IRS position on staking income has not changed. There was no court decision that another taxpayer could refer to as a precedent. The settlement of the case was the only point of contention.”
Recently, the Court of the Middle District of Tennessee ruled that the IRS is required to refund the Jarretts the tax credits they paid as Tezos (XTZ) staking income tax. The court ruling was taken by the media as an acknowledgment by the IRS that staking profits should not be subject to income tax unless denominated in US dollars. And that the IRS is prepared to reflect this in future tax rules.
Wilkes noted that the IRS settled the dispute by paying the spouses restitution. Unless the plaintiffs come up with an unexpected legal argument to move the case forward, the likely outcome is an outright dismissal of the proceedings:
“The Department of Justice will simply file a motion to dismiss the case, citing its dubiousness. This means that the decision is no longer applicable as the money has been refunded.”
Wilkes stated that the Jarretts could continue with the trial and even win it. After all, the couple works with a team of experienced lawyers and receives the support of the Proof of Stake Alliance (POSA). A TaxBit spokesperson noted that the Jarretts recently released a statement demanding that the IRS clarify its position on staking taxation and remove taxation of remuneration “for both proof-of-stake protocols and proof-of-work protocols.”
Wilkes stressed that there are currently no clear tax guidelines for unclaimed cryptocurrency staking rewards. At the moment, the IRS only sends requests to taxpayers: “Have you earned income from staking cryptocurrencies, sold, exchanged, or otherwise disposed of with any financial interest in any virtual currency?”
In May 2021, Joshua and Jessica Jarrett filed a lawsuit alleging that the 8,876 XTZ they earned by staking in 2019 were not sold, and therefore no income or profit was generated from these crypto assets. . The IRS said it would reimburse the Jarretts for $3,793 in tax credits with “statutory interest.”
Source: Bits
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