taxes Archives

Last week’s European Parliament debate on a tax reporting resolution (PDF) brought into focus the depths of concern regarding tax evasion by cryptocurrency holders in the European Union. Even though there was hopeful discussion that blockchain technology could be a potential solution for standardized tax reporting on digital assets across the continent, the consensus view appeared to hold that crypto holders aren’t paying their fair share.

A press release (read it) offered this sub-headline, “Members of the European Parliament adopted a resolution on October 4 calling for a better use of blockchain to fight tax evasion and for member states to coordinate more on the taxing of crypto assets.”

In spite of a vote that included 566 votes “for,” 7 “against” and 47 abstentions, the resolution’s debate during a plenary session of Parliament included a number of Members who voiced starkly different points-of-view in spite of their support.

Glass half-empty

It certainly sounds great: a European tax system on the blockchain. But who/what exactly is going to implement this? It is not clear from the resolution.

What is clear is that Europe believes tax evasion is happening and the rule of law needs to get ahead of it.

Continue reading “European Parliament Sees Crypto Tax Evasion And Blockchain For Solution”

Tax reporting, compliance and DeFi, oh my!

Two weeks ago, The Financial Accounting Standards Board (FASB) agreed to take up a new review of accounting and disclosure standards for digital assets. The blockchain industry hailed it as a needed addition to FASB’s “technical agenda” and an indication of further acceptance of what the standards board calls “plain vanilla” cryptocurrencies – Bitcoin and Ether.

At last week’s Permissionless conference, Miles Fuller, a former IRS employee and current Head of Government Solutions for TaxBit, echoed industry frustration with today’s reporting standards saying in a discussion with Chamber of Digital Commerce’s Perianne Boring, “You need your balance sheet to be a full reflection of reality.”

As late as October 0f 2020, the not-for-profit accounting standards board, which guides all publicly traded companies such as digital asset holders Tesla and MicroStrategy, said that if the value of Bitcoin goes down, for example, a company must record the decrease in assets on its balance sheet on an annual basis. But if it goes up, the same companies only get to record a gain if the assets are sold.

TaxBit’s Fuller expanded the reporting pain point to the IRS and its intersection with decentralized finance (DeFi) noting how – as a former insider at the IRS – the agency was close to providing guidance to consumers on tax compliance with digital assets, but then Congress got in the way. Fuller added, “Sometimes I hear people put the onus on the IRS, but it’s Congress – the IRS is just trying to administer it.”

Continue reading “In Wake Of FASB Decision, Taxes And Compliance Take Centerstage With DeFi”