Node40 just released a software as a service offering (SAAS) to bring tax compliant bitcoiners an easy-to-use and “IRS-friendly” application. According to a Node40press release, bitcoiners across the globe can begin reporting their taxable crypto-income. This way they do not risk tax evasion, under reporting or over reporting.
This new software comes 4 months after the company provided a similar implementation for dash users. Node40 says the software will bring relief to bitcoin users, because prior to their implementation, not many options for tax settlement existed. Now crypto-users can report income to the taxman each year.
Perry Woodin, CEO of NODE40 said, “Not only is blockchain accounting inherently complicated, it’s currently under heavy legal scrutiny. Since the IRS considers digital currency property, each and every input to a transaction has a potential gain or loss. Tracking the cost basis and days carried on every input to a transaction is simply not possible without sophisticated software. Nobody wants to think about gains and losses when purchasing goods or services, much less manually record transactions in a spreadsheet for future record keeping. NODE40 Balance allows digital currency owners to use the blockchain as the public ledger it was always intended to be, and provides users with the most accurate data for their reporting obligations at tax time.”
IRS is Scrutinizing Possible Crypto-Tax Evaders
Woodin is correct about the government agents getting more involved with cryptocurrency and hunting for tax evaders. Recently, the IRS and Coinbase have been involved in a pitched legal battle. IRS agents have been trying to gain access to Coinbase user data to determine if individuals have been paying taxes on cryptocurrency usage. This news surfaced because only 800 Americans reported bitcoin gains from 2014 to 2015. Woodin elaborated:
The IRS Coinbase summons motivated Dash owners to use our service and get their records in order for the 2016 tax season, and Bitcoin owners have well and truly been put on notice. The voluntary compliance rate for United States citizens is over 80%, which makes it obvious that most people take reporting their tax liability seriously; we believe bitcoin users haven’t had the right tools available yet. If the industry wants digital currency transactions to become commonplace, an integrated service like NODE40 Balance is essential. It validates the legitimacy of a new, complex form of transacting, and compliance is crucial to bringing a new technology into the mainstream.
Other Tax Compliance Software
Prior to the release of the Node40 “IRS-friendly” crypto software, there were very few options for bitcoiners to easily submit their taxes. Many people used FIFO, or first in first out method, which is inaccurate as a result of the high price fluctuations of cryptocurrencies.
One tax-friendly platform is called Libra, which syncs up with Coinbase, Bitpay, and Circle. It is a blockchain accounting solution that provides ease of use to the documentation collection process. Another option isBitcoin Transaction Coordinator. It helps users maintain tax-compliant cryptocurrency documentation. It enables models for ease of customer use and bank deposit information. License for the software is free for up to 10 transactions per quarter, but a fee is assessed for more usage.
Taxation in the Cryptocurrency Community
However, even with all these “IRS-friendly” tax software options, many people in the ecosystem may feel that taxation is unnecessary and wrongful. They may have gotten into cryptocurrency for the sheer purpose of evading taxation. These class of people are usually called “crypto anarchists.”
They see the State as a thief and villain, and thus prefer to disobey and not pay taxes. Some even argue that cryptocurrencies like bitcoin were created to bring money back to the people and prevent government extortion.
Timothy May, in the Crypto Anarchist Manifesto, was one of them. He said, ” Computer technology is on the verge of providing the ability for individuals and groups to communicate and interact with each other in a totally anonymous manner…These developments will alter completely the nature of government regulation, the ability to tax and control economic interactions, the ability to keep information secret, and will even alter the nature of trust and reputation.”
In the end, there is no telling what people will decide to do, but “IRS-friendly” software is available for anyone interested in complying with current tax laws on bitcoin and other digital assets.
Do you believe this tax compliance software will be heavily used? Is it important for bitcoiners to pay their taxes? Share your thoughts in the comments section below!
Images courtesy of Shutterstock and Node40