Fitness coach Josh Jarrett is taking on the IRS in a legal battle over tax policies on staking rewards in the crypto world. Jarrett, who also dabbles in crypto investments, has filed a lawsuit against the IRS to seek clarity on how staking rewards should be taxed.
In a recent court filing, Jarrett argues that taxing staking rewards as income upon creation is overly complex and leads to over-taxation for individuals involved in staking. He believes that staking rewards should be treated as property and only taxed when they are sold, similar to how other industries are taxed.
Jarrett’s fight against the IRS is supported by the crypto advocacy group Coin Center, based in Washington, D.C. The organization shares the view that the current tax policy on staking rewards hinders innovation and creates compliance challenges for individuals in the crypto space.
Staking rewards are earned by participants who lock up tokens in a staking contract to support a blockchain network. Jarrett’s argument is that these rewards should not be taxed as income when they are created, but rather when they are sold. This approach would align with how other assets like crops or minerals are taxed in other industries.
Coin Center further emphasizes that the IRS’s current policy on staking rewards results in over-taxation and discourages the use of digital assets and blockchain technologies in the US. The organization believes that a more nuanced approach to taxing staking rewards would promote innovation and growth in the crypto space.
Jarrett’s lawsuit against the IRS is part of a larger effort to establish a clear precedent on how staking rewards should be taxed. By challenging the current tax policy, Jarrett and Coin Center hope to pave the way for a more favorable regulatory environment for individuals and businesses operating in the crypto ecosystem.
As the legal battle unfolds, the outcome could have far-reaching implications for how staking rewards are treated by tax authorities in the US. The case highlights the ongoing challenges and uncertainties surrounding tax policies in the rapidly evolving world of cryptocurrencies and blockchain technology.