Bitstamp Taps Sovos Reporting Solution Ahead of Tax Season in the US

Bitstamp, one of the largest crypto platforms in Europe, has partnered with Sovos, a startup that focuses on cryptocurrency accounting and auditing in order to modernize its tax information reporting.

The reporting Obligations Obligations In finance, an obligation is a financial responsibility where the terms of a contract must be met. Should an obligation between parties fail then the party who is at default may face legal action. In this scenario, the guilty party will not only have to agree to pay the set amount to fulfill the contractual arrangement but may also be responsible for covering all legal proceedings cost. Routine payments or outstanding debt of any kind are considered financial obligations, so if someone owes you In finance, an obligation is a financial responsibility where the terms of a contract must be met. Should an obligation between parties fail then the party who is at default may face legal action. In this scenario, the guilty party will not only have to agree to pay the set amount to fulfill the contractual arrangement but may also be responsible for covering all legal proceedings cost. Routine payments or outstanding debt of any kind are considered financial obligations, so if someone owes you Read this Term for cryptocurrency in the US continue to evolve at a breakneck pace, often lacking clear guidance from regulatory authorities. Most notably, the Internal Revenue Service has added a question to the standard 1040 form, America's primary income tax form. The compliance measure comes in the form of a checkbox and asks taxpayers to disclose if they have ever dealt in Cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw Read this Term in 2020.

Bitstamp will use Sovos’ technology to automate its 1099 forms and filings, which helps reduce potential human errors and ensure automatic regulatory updates. The company’s Tax Information Reporting solution, which has experience in handling tax issue in alternative currency markets, allows Bitstamp to protect its users just as investors of other asset classes.

"The Sovos solution automates complex reporting at the federal and state level, which allows our team to focus on other client-centric initiatives,” said Hunter Merghart, Head of U.S. at Bitstamp.

“As cryptocurrencies grow increasingly popular, they have in turn fallen under heightened IRS scrutiny. Bitstamp understands that to remain compliant, they need a trusted partner like Sovos to automate what can be a truly arduous and confusing process,” added Paul Banker, General Manager of Tax and Regulatory Reporting at Sovos.

IRS Gets Serious about Cryptocurrency

This collaboration with Sovos should address the reporting needs of the cryptocurrency customers in the upcoming tax season, which kicks off in January. As such, accounting professionals servicing crypto-transacting clients will have sources required when reconciling cryptocurrency balances and transactions.

Recently, there have been numerous reports emerging of tax authorities clamping down and going after traders underreporting their cryptocurrency profits. The IRS also sent letters to taxpayers who might have failed to report income and pay the resulting tax from cryptocurrency transactions.

At the very core, the IRS still deems crypto assets to be property rather than currency for income tax purposes, the same as its regulatory guidance came out five years ago. That means the authority will continue to tax crypto profits and losses like those for stocks, at capital gains rates.