Published: February 3rd, 2020
– The cloud-based tax refunds processing platform Refundo can now send out tax returns via three more cryptocurrencies. U.S. citizens claiming tax refunds will from now henceforth get their refunds in Ethereum (ETH), Bitcoin Cash (BCH), and Ripple (XRP) in addition to Bitcoin (BTC).
U.S. citizens can now claim Federal and state tax refunds in three more cryptocurrencies that are Ripple, Ethereum, and Bitcoin Cash through the online tax service and refund processing platform Refundo.
Refundo is partnering with BitPay, a Bitcoin payments service provider to allow cryptocurrency enthusiasts to get tax refunds in Bitcoin and three other altcoins. The service, which the platform calls CoinRT was launched in April 2019 to initially offer refunds in Bitcoin.
Speaking during the relaunch of the service, the CEO of Refundo Roger Chinchilla said that they love new technology and are always looking for opportunities that make it easy for their customers to access tax refunds in a convenient manner.
He added that when they launched CoinRT, he was certain that they were on to something big and that doing tax refunds in Bitcoin was just as a start. Chinchilla thinks that cryptocurrencies solve the problems of the unbanked. Also, because transactions undertaken in coins are increasingly faster and attract relatively lower costs, they are appropriate for tax refunds.
Chinchilla said he is happy that Refundo already is offering the option of four cryptocurrencies. He hinted that the service provider has plans of introducing even more coins in the future. Now, the more than 141 million Americans that have chosen to dabble with cryptocurrencies have an easy way of getting tax refunds.
Since inception, Refundo has sought to fan the narrative that it is looking out for the needs of low-income taxpayers. The CEO said that most taxpayers are forced to pay high fees whenever they seek tax or financial services. He added that it is unfortunate that despite paying an arm and a leg, most customers get misleading terms.
Chinchilla said that Refundo will charge a flat fee of $34.95 which will allow taxpayers to file tax returns online, visit a tax professional, or have tax refunds processed and paid out in cryptocurrencies.
He said that Refundo’s seamless tax refund process helps taxpayers to avoid waiting for weeks for the tax refund cheque to come through the mail. He added that their services eliminate the need to pay cheque-cashing fees or endure dealing with traditional banks.
To use the platform, taxpayers will need to create an account on Refundo.
Once a taxpayer has an account, he or she will be assigned a unique routing number as well as an account number which the taxpayer inputs on the tax return. Platform users will also undergo the requisite background checks and provide details that satisfy the Know-Your-Customer (KYC) regulations. Besides, they will provide their Bitcoin, Ripple, Bitcoin Cash or Ethereum wallet addresses where Refundo will remit the tax refunds.
Once the state or IRS directs the tax refunds to the account number that the taxpayer is assigned, Refundo will process the payment and send the cryptocurrency equivalent into the address that the taxpayer has provided.
The move by Refundo to give taxpayers the option of receiving their refunds in cryptocurrencies complements what the states are doing with regards to making the process of tax compliance less complicated.
In November 2018, Ohio became the first U.S. state to allow businesses to pay taxes in Bitcoin. Companies that want to take up this initiative have to opt-in via OhioCrypto.com. The taxes that the state accepts in the form of cryptocurrency are diverse and range from employee withholding taxes to cigarette sales tax.
Soon after Ohio made the bold move, other states have attempted going crypto as well. Arizona, Illinois, and Georgia have bills before their state legislatures that are waiting for enactment.
The U.S. tax system relies on voluntary compliance. The IRS, as such, expects taxpayers to report all taxable transactions they undertake regardless of whether the IRS has knowledge of these transactions or not. This freedom aside, the IRS has three ways of determining the tax burden of cryptocurrency holders.
Cryptocurrency enthusiasts that receive Form 1099-B or Form 1099-K from a crypto exchange whenever they transact voluntarily inform the IRS of their transactions via there forms. This happens through the matching mechanism of the IRS Information Reporting Program (IRP).
Customers of a cryptocurrency exchange who manage either 200 transactions or $20,000 plus in proceeds in a year are issued with Form 1099-K which indicates the proceeds for each month. The crypto exchange prepares this form for every customer that makes the cut. The customer gets to keep a copy of the form while another is sent to the IRS.
When you file your returns and fail to include the amounts on the form, the IRS gets to flag your returns for underreporting.
Aside from IRP, the IRS is legally allowed to issue subpoenas ordering crypto exchanges to disclose information about user accounts. Recently, the IRS compelled Coinbase to disclose information about almost 14,000 user accounts.
The IRS has also introduced a virtual currency question on Schedule 1 (Form 1040 or 1040-SR). Beginning 2020 tax season, every taxpayer will have to disclose whether they received, sold, sent, exchanged or had a financial interest in any cryptocurrency.
The U.S. residents will from now on receive tax refunds in cryptocurrencies as one of the options. The service offered by Refundo in partnership with BitPay will make it convenient for individuals to receive tax refunds, cut the cost of such transactions and speed up the exercise of processing these payments. The announcement comes in the wake of Ohio becoming the first state to allow businesses to pay their tax obligations in cryptocurrencies. The move will help make cryptocurrencies more relevant and probably help with mass adoption.