US-based crypto exchange Gemini wants to help its users comply with the tax requirements in a convenient manner. The company hired Sovos to modernize its tax information reporting.
The Solution Will Automate Gemini’s Tax Filings
The exchange platform managed by Taylor and Cameron Winklevoss will use Sovos’ technology to automate its 1099 forms and filings. The solution is expected to reduce potential human errors and ensure automatic regulatory updates. The latter is quite important in an industry that is still at its nascent stage.
Gemini picked Sovos for its expertise in tax reporting. The company is currently the largest private filer to the Internal Revenue Service (IRS) of 10-series forms. Besides this, Sovos has experience in handling tax issue in alternative currency markets.
Joshua Rawlins, managing director at Gemini’s financial operations, commented:
With Sovos, we can react quickly to shifting cryptocurrency tax reporting regulations, helping to ensure our customers are just as protected as investors of other asset classes.
The executive continued,
Sovos provides services to some of the largest traditional financial services institutions and will bring that level of expertise and sophistication to address the reporting needs of our cryptocurrency customers in the upcoming 2019 tax season
IRS Issues Updated Crypto Tax Guidance
The IRS is quite strict when it comes to taxes, and it couldn’t ignore the rapidly growing cryptocurrency market.
The IRS treats cryptocurrencies like Bitcoin and Ethereum as property. This suggests that the same tax rules applied to property transactions are valid for the trade of cryptocurrencies. Thus, crypto transactions are subject to capital gains tax and Gemini traders must take this into account.
Last month, the IRS issued two updated pieces of guidance for taxpayers who trade cryptocurrencies, which the tax agency calls virtual currencies. The new guidance includes Revenue Ruling 2019-24 and FAQs.
IRS Commissioner Chuck Rettig explained:
The new guidance will help taxpayers and tax professionals better understand how longstanding tax principles apply in this rapidly changing environment. We want to help taxpayers understand the reporting requirements as well as take steps to ensure fair enforcement of the tax laws for those who don’t follow the rules.
Do you think crypto traders who use Gemini, Coinbase, and other US platforms should be taxed? Share your thoughts in the comments section!
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