BitPay (cryptocurrency payment services firm) partnered with Refundo (tax-related financial products company) to enable people to get a portion of their tax refund back in bitcoin. A new product from Refundo dubbed coinRT allows taxpayers to receive a portion or all of the federal and state tax refunds in bitcoin via Bitpays payouts, this would ensure speed, low transaction fee and serving the underbanked.
In order to use this platform, an account would have to be created by the taxpayers, provide a bitcoin wallet address before receiving a unique routing and account number to input their tax return. Customers also have to pass a Know Your Customer (KYC) procedure, and once the Internal Revenue Service (IRS) or state deposit the refund, Bitpay processes the payment then transfers it to the taxpayer’s crypto wallet.
The cryptocurrency tax issue has since been embraced by leading financial industry players. In March, big four auditing and professional services firm Ernest and Young launched a tool for accounting and preparing taxes on cryptocurrency holdings. This new tool is reportedly able to get information about crypto transactions from “virtually all” major exchanges, consolidate data from various sources and automatically produce results, including cryptocurrency-related IRS tax returns.
In February, Turbo Tax Online (United States tax preparation software) partnered with coinTax, LLC to add the calculation of cryptocurrency tax to its services. Once calculated, capital gains and income reports can be downloaded or uploaded directly into form 1040 Schedule D.
On the 11th of April, 21 U.S federal representatives sent a bipartisan letter to the IRS requesting guidance on how to report virtual taxes. This was done before the filing deadline for federal income tax returns on the 15th of April 2019. The letter specifically asked the IRS for acceptable methods of calculating the virtual currency cost basis, cost basis assignment, and lot relief, also the tax treatment of crypto hard forks, citing bitcoin’s fork bitcoin cash that took place in August 2017.
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