ProfitStance Examines the Troubles of Taxes in Mobile Payments Tech Cryptocurrency

November 16, 2018         By: Steven Anderson

Last year was the first year we really started hearing about tax issues in the cryptocurrency space. Basically, virtually no one was paying on them, and likely for a variety of reasons. Whether it was just a lack of clarity over how much exactly was owed, or just a kind of tax protest, taxes didn’t factor into the field much. Now, ProfitStance sent word our way about its latest report looking to give some clarity into the cryptocurrency tax field.

The report, titled “The Crypto Landscape: Tax Accounting Issues and Solutions,” made it clear that the problems with cryptocurrency taxation were wide-ranging, and far from limited to people wanting to chisel the government out of its cut. One major issues was the rapidity with which trades happened. With over 1,600 cryptocurrencies in play at last report, and multiple wallets and exchanges involved, that tends to throw a fogbank on the whole situation in short order.

What’s more, metadata on cryptocurrency movements is limited at best, which means that the tax liabilities that are reported are often higher than they should be. It’s hard enough to get people to pay taxes; getting them to knowingly overpay is next to impossible. What’s more, the crypto exchanges aren’t really helping out on this front, parceling out limited information that’s often highly siloed and is even inaccurate on some fronts. Just to round it out, regulatory enforcement is light at best as yet, and that means crypto investors are just left on their own.

Essentially, nothing’s going to solve this matter but conclusive, and heavily-fanged, guidance about just what’s owed and just what should be paid. Expecting investors to voluntarily figure out their own tax bill and then write a check therein is crazy by most any standard. Plus, with so many crypto investors engaging in HODL—hold on for dear life—protocols, who knows how much tax is even involved? It’s not like they made actual money; the value may have increased, but it’s still in the currency itself.

Still, for those who want to stay square with the federal government, it’s clear new tools will be needed to cut through the smoke and static. ProfitStance has some plans along that line, but it’s unclear how many will even pay attention.