Libra Bitcoin Accounting Firm Requests Internal Revenue System (IRS) to Update Crypto Guidelines
While many countries such as France and Malta have created comprehensive crypto tax guidelines, the United States seems to be lagging behind.
Last year, two members congress wrote an open letter criticizing the IRS for its sluggishness in creating a crypto tax code and urged them to do better. It seems the criticism hasn’t ended as Jake Benson, the CEO of Libra, has once again pointed out the gaps in the current tax code, which hasn't been updated since 2014.
This is particularly important at his time because of the crash of the bitcoin price in late 2018 means that many who are trading as of now will make a loss. The current tax code has few provisions for such a situation and that could lead to confusion.
An example of this is a recent case where a Swedish man was ordered to pay roughly four times the profit he made during his crypto trading career due to a tax code oversight and is now appealing the matter in court.
Meeting Market Needs
Benson has echoed this sentiment by saying that certain scenarios aren’t covered in the current code and that this leaves traders and everyday crypto users at a loss. For example, traders are not currently required to make use of 1099-B forms which are used by traditional stock brokers.
“The burden is left upon the fund or the individual that’s trading to track cost basis, and this is extremely challenging,” says Benson. “Some customers track their cost basis, some rely on proceeds, and it’s a really challenging scenario.”
Aiding crypto users and traders to properly file taxes is the basis of Libra’s business, including their creation of the cryptocurrency tax calculator which takes into consideration the price of cryptocurrency as if the time it was purchased and also the price as of the time it was sold.
Libra, a blockchain accounting firm, focuses mostly on institutional clients such as Circle and Galaxy Digital. On top of this, they offer SOC-certified software to their clients.
The use of SOC-certified software means that the company can produce SOC1 credentials. SOC1 credentials imply that the information being supplied by the firm is trustworthy and this has opened up Libra to a wider base of institutional clients.
The firm has also made history by becoming the first crypto-native firm to receive a SOC1 Type 2 attestation report, which means that they have undergone at least a 6-month examination.