Josh and Jessica Jarrett have filed a lawsuit against the IRS, arguing that staked XTZ tokens should only be taxed upon sale. They claim newly minted tokens from staking shouldn’t be taxed until sold.
Josh Jarrett, the co-founder of Tezos, and his wife, Jessica Jarrett, have filed a new lawsuit in the Tennessee Federal Court against the IRS.
The lawsuit pertains to the IRS’s position on taxing staked XTZ tokens. The couple contends that newly minted tokens earned through staking should only be taxed upon sale, arguing that these new assets should not be subject to taxation until sold.
Specifics of the Legal Action
In 2021, the Jarretts filed a lawsuit against the IRS with comparable arguments, requesting a refund for taxes paid on staked XTZ tokens. The Jarretts rejected a $4,000 settlement offer resulting from the previous lawsuit.
This time, their objective is to prevent the IRS from permanently classifying newly created crypto assets as income and addressing staked tokens.
Assistance from the Coin Center
Coin Center, a proponent of the Jarretts case, underscores the importance of this legal dispute for the future of decentralized technologies and cryptocurrency. They assert that “this tax issue applies to everyone as proof of stake.”
The Jarretts’ legal process is designed to mitigate uncertainties in the classifying and taxation of crypto assets as discussions regarding the IRS’s policies persist.
This case’s outcome can potentially influence the relationship between the IRS and the crypto community and affect all crypto holders who participate in staking.
In summary, the Jarretts’ lawsuit can substantially impact crypto taxation policies and establish a precedent for other crypto holders in similar situations.
