ConsenSys issued a statement on February 7 in support of the appeal of Jarrett’s case against the United States on the taxation of staking rewards. The case stemmed from a dispute over a refund of about $4,000 that Joshua and Jessica Jarrett claimed for XTZ tokens they validated in 2019.
The Jarretts argued that their gambling rewards should be treated as property and taxed only upon sale. After the US Internal Revenue Service (IRS) ignored their request for a refund, the Jarretts filed a lawsuit.
They issued the refund in 2022, but the Jarretts rejected it, preferring to pursue their legal case. “I need a better answer,” Joshua Jarrett said then.
However, his suit was later dismissed, after a Tennessee district court ruled in October that the repayment payment rendered the case moot. Now the Jarretts are appealing that decision.
Bill Hughes, Senior Legal Counsel and Head of Global Regulatory Affairs for ConsenSys, stated in a statement:
“We support Josh and Jessica Jarrett’s appeal because we believe that American taxpayers, who run many of Ethereum’s validators, deserve fair treatment under the tax code. […] We’re glad the Jarretts won’t let the IRS sidestep this issue by asking an appellate court to reinstate their case.”
The ConsenSys statement went on to note that the Shanghai Ethereum upgrade scheduled for March will allow validators to withdraw 16 million locked Ether (ETH), with the goal of making the tax treatment of staked cryptocurrencies a timely matter. The private blockchain reiterated its stance on taxation in the statement:
“Similar to a farmer farming, staking rewards are created by protocol to incentivize participation in security provision. Assets created are not taxed until they are sold.”
The Proof of Stake Alliance has also strongly supported the Jarretts. That organization issued a statement following the October court decision saying: “The IRS offered Josh a tax refund for 2019, and while this obviously suggests the IRS agrees with Josh, the IRS refused to confirm this or grant Josh the same tax treatment in the future.”
ï¸ Proof of Buildersï¸
Our CEO, @ethereumJoseph joined @adambn on stage @BuildingBlock_s to share his story about how he founded @ConsenSys and how instrumental it was in shaping the @ethereum ecosystem.âš¡ #ETHTLV #BuildingBlocks pic.twitter.com/6enq6Mbm24
— ConsenSys (@ConsenSys) February 7, 2023
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