Josh Jarrett, the founder of Tezos, and his wife Jessica Jarrett have filed another lawsuit against the IRS in Tennessee Federal Court over the taxation of staked XTZ tokens. This legal battle could have significant implications for the future of cryptocurrency taxation.
The Details of the Lawsuit
The Jarretts argue that newly created tokens earned through staking should only be taxed when they are sold. They believe that these new assets should not be taxed until they are actually sold or exchanged. This isn’t the first time the couple has taken legal action against the IRS. In 2021, they filed a similar lawsuit demanding a refund for taxes they paid on staked XTZ tokens. The case ended with the IRS offering a $4,000 settlement, which the Jarretts declined.
Coin Center’s Support
The lawsuit is gaining widespread attention, especially with the support of Coin Center, a nonprofit organization focused on cryptocurrency policy. The organization stresses that this issue is crucial for the entire proof of stake community, as the outcome could impact how staking rewards are taxed. The Jarretts are seeking to permanently end the IRS’s practice of treating newly created crypto assets as income.
Potential Impact on the Crypto Community
If the Jarretts win, the decision could have a profound effect on all cryptocurrency holders who participate in staking. It would also help clarify the ongoing debate over how the IRS classifies and taxes crypto assets. Coin Center notes that the resolution of this case could significantly shape the future relationship between the IRS and the crypto community.
As the lawsuit progresses, it could become a pivotal moment for U.S. cryptocurrency tax policy. Dey There will continue to follow this case closely, as it could serve as an important example for other crypto investors facing similar challenges.
Tezos, XTZ tokens, staking, IRS lawsuit, proof of stake
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