US-based Gemini, the popular crypto exchange, wants to help the users comply with the latest tax requirements in a very convenient manner. The company hired Sovos in order to modernize the tax information reporting as we are reading further in the cryptocurrency news.
The US-based Gemini managed by Taylor and Cameron Winklevoss, and they will use the Sovos technology to automate the 1099 forms and filings. The solution is expected to reduce the possible human errors and ensure automatic regulatory updates since it is quite important for the industry that is still at its beginning.
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Gemini picked Sovos for its expertise in tax reporting and the company is among the largest private filer to the Internal Revenue Service of 10-series forms and besides this, the company has experience in handling tax issues in alternative currency markets. The managing director at Gemini’s financial operations commented:
‘’With Sovos, we can react quickly to shifting cryptocurrency tax reporting regulations, helping to ensure our customers are just as protected as investors of other asset classes. Sovos provides services to some of the largest traditional financial services institutions and will bring that level of expertise and sophistication to address the reporting needs of our cryptocurrency customers in the upcoming 2019 tax season.’’
The IRS is very strict when it comes to taxes because they could not ignore the fast-growing cryptocurrency market. The agency treats cryptocurrency like Bitcoin and Ethereum as property. This suggests that the same tax rules are applied to property transactions and are valid for the trade of cryptocurrencies. Crypto transactions are subject to capital gains and the traders of the exchanges must take this into account.
Last month, the IRS issued two major updates of guidance for the taxpayers who trade cryptocurrencies which the tax agency calls virtual currencies and the new guidance includes the Revenue Ruling 2019-24 and FAQs. The IRS Commissioner Chuck Retting explained:
‘’The new guidance will help taxpayers and tax professionals better understand how longstanding tax principles apply in this rapidly changing environment. We want to help taxpayers understand the reporting requirements as well as take steps to ensure fair enforcement of the tax laws for those who don’t follow the rules.’’
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