The IRS faces new lawsuits over cryptocurrency staking tax policy

2024-10-11 08:44:35

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ChainCatcher News, American citizen Josh Jarrett, with the support of Coin Center, has filed a lawsuit against the IRS regarding the tax policy on cryptocurrency staking rewards.

Block rewards are new cryptocurrency tokens earned by validators for adding blocks to the blockchain. The IRS currently treats these rewards as taxable income upon receipt, which Jarrett and Coin Center argue is unfair. The lawsuit states that block rewards should be considered new property and not taxed as income, with taxation only occurring when sold or exchanged for cash.

According to Jarrett, this principle applies equally to other forms of new property, such as crops or minerals, which are only taxed upon sale. The lawsuit claims that taxing staking rewards before they are sold leads to over-taxation and imposes additional and unnecessary regulatory burdens on crypto node operators.

This lawsuit marks Jarrett's second attempt to sue the IRS on this issue, aiming to push for a revision of the current policy. The lawsuit also points out that the IRS's stance on taxing staking rewards may hinder innovation and development in the cryptocurrency industry.

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