As it stands, crypto staking taxes is a real thing for hundreds of thousands of stakers all over the world.
This differs between countries and jurisdictions, but at least in the United States, no matter if you sell your staking rewards or keep accumulating, you owe Uncle Sam (the IRS) their cut.
However, this might soon change.
For the past 18 months, Josh and Jessica Jarret, a couple from Nashville, Tennessee has been in the middle of a legal battle over their Tezos (XTZ) staking rewards, or more specifically, the taxes they paid for them, even though they didn’t sell any of them at any point.
The Jarret’s main claim in the legal case is that Proof-Of-Stake dervied assets are not earned through a manner of exchange nor transaction, but are a taxpayer-created property that should not be taxed until a taxable event occurs – a sale, or some form of disposal.
To everyone’s surprise, the court is now siding with the Nashville couple and has ruled a full refund of the paid crypto staking taxes.
But they declined. They want to achieve more from this litigation.
At first glance, this seemed like great news… But until the case receives an official ruling from a court, there will be nothing to prevent the IRS from challenging us again on this issue. We need a better answer.
Future Of Crypto Staking Taxes Is At Stake (Some pun intended)
Industry group Proof of Stake Alliance (POSA), a partial funder of the lawsuit, said that in turning down the reimbursement, the Jarretts have set the stage for a wide-sweeping legal precedent.
POSA, and the broad coalition it represents, applauds Jarrett’s decision to continue his lawsuit. He has rejected the IRS’s offer of a refund, opening up the possibility of a court ruling that will give him, and millions of other taxpayers in the same position, the ability to confidently plan for the future. The importance of this issue has been raised by many, including Coin Center, the Blockchain Association, and several Members of Congress.
Depending on how this case ends up being settled, it will likely have far reaching implications on crypto stakers all over the world and how much taxes they pay for simply accumulating and not doing anything with their staking rewards.
CryptoStaker will keep updating you on the latest in crypto staking taxes, stay tuned.