Blockchain Software as a Service startup Node40 has released its cryptocurrency tax reporting product for Bitcoin users.
Having initially been available for Dash traders, the company’s Balance software is now able to to calculate Bitcoin gains for tax reporting purposes precisely.
The tool is a direct response to increased scrutiny from US authorities, not least among which the IRS’ ongoing battle with Coinbase amid surging user numbers.
“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,” CEO Perry Woodin said in a press release about the launch.
“The voluntary compliance rate for United States citizens is over 80 percent, 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.”
Users will initially have to transfer coins to an Electrum wallet to use the tax reporting service before it is made available more widely.
It is still problematic for the majority of Bitcoin users to successfully report capital gains in jurisdictions where doing so is legally required.
Statistics which surfaced as part of the IRS-Coinbase debacle suggested only several hundred US traders report each year, while the overall numbers transacting with Bitcoin are now in the millions.
“Even as digital currency matures and more mainstream investors jump aboard, we believe that Bitcoin will permanently remain a form of property,” Woodin continued.
“[…] What this means is that reporting Bitcoin tax liability is an individual legal responsibility […] and Americans need a long term, reliable, cost effective, and most importantly, IRS-friendly solution.”