Tezos Staking Couple Ramps Up Pressure on US IRS with New Legal Brief

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Tim Alper

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Tim Alper

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Tim Alper is a British journalist and features writer who has worked at Cryptonews.com since 2018. He has written for media outlets such as the BBC, the Guardian, and Chosun Ilbo. He has also worked...

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June 25, 2023

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A case involving the US Internal Revenue Service (IRS) and its alleged attempt to refund a couple’s tezos (XTZ) crypto staking tax bill could come to a head after one of the duo pushed for a “definitive ruling” that could change the way staking is taxed in the United States.

As previously reported, the case revolves around Joshua and Jessica Jarrett, who were initially served up with an IRS tax bill for staked tokens they had not converted to fiat. Joshua Jarrett attempted to dispute the bill, after which he was reportedly offered a settlement. Some claimed that the IRS was acting in a bid to avoid setting legal precedent.

But it seems that legal precedent is precisely what Jarrett is now after. He wrote on Twitter:

“The government offered me a refund and wants my case dismissed without acknowledging I’m right. I’m opposing that to try to seek a definitive ruling. My case is a straightforward question of the tax law and I need a court to decide it.”

He added that he had filed a legal brief on March 15.

Jarrett’s assertion is that new property (staked or even mined tokens) can “never” be taxed “until it’s sold” for fiat.

As such, he claimed that his case “isn’t about avoiding tax, it’s about when” stakers are taxed and “whether it’s fair.”

Furthermore, he claimed that taxing block rewards “as income” makes “paying tax insanely complicated,” adding:

“New blocks and tokens are created non-stop. And more importantly, taxing block rewards as income results in dramatic over-taxation.”

The Washington-based crypto lobbying group Coin Center stated that it had also filed an amicus curiae brief (a legal term for a document submitted by a “friend of the court”) to the Tennessee District Court in order to “help the judge understand the value of a final ruling.”

Coin Center’s Director of Research Peter Van Valkenburgh tweeted that the case had the potential to “upend how block rewards are taxed,” noting that Jarrett had “rejected his refund to get the court to offer a clear ruling.”

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