Tech Intelligence Bulletin (HG Insights) – Paxos, America’s first regulated crypto-asset platform, has chosen Sovos for its tax information reporting needs.
Sovos’ Tax Information Reporting Solution will automate Paxos’ 1099-B forms and filings, eliminating errors and delivering automatic regulatory updates in this constantly changing arena. While crypto platforms wait for more clarity from the IRS around reporting guidelines, platforms like Paxos are proactively investing in solutions that will enable them to stay compliant in advance of forthcoming regulatory waves.
“The high volume and complexity of 1099 crypto reporting require sophistication. That’s why we turned to Sovos,” said Andrew Chang, chief operating officer, Paxos. “Now, we can more easily ensure that we and our clients are compliant and prepared for the inevitable changes to come.”
To date, the IRS has issued Notice 2014-21, which indicates Form 1099 reporting is required for certain virtual currency transactions. However, the guidance leaves a lot of questions unanswered. In November, IRS Commissioner Charles Rettig indicated the industry should, “pay attention to informal guidance as though it’s formal guidance.” He also promised, “the IRS will have more information about than you could ever imagine.”
However, murky cryptocurrency regulations haven’t stopped the IRS from starting to enforce 1099 reporting regulations for crypto. In addition, the Securities and Exchange Commission has offered recommendations to investors to only trade on platforms that have registered as national security exchanges, a move that has added further pressure to report transactions to the IRS.
Intelligent tax information reporting
“The alternative currency market is focused on growing up in order to avoid the staggering volatility the market saw last fall,” said Paul Banker, general manager of tax information reporting at Sovos. “This era of maturity will undoubtedly be spurred by additional IRS regulations; therefore, intelligent tax information reporting is now critical to trading platforms’ future success.”
In a recent interview with Thrive Global, Andy Hovancik CEO of Sovos, said, “We believe in a world of frictionless commerce, where businesses can grow free of regulatory risk — and communities can thrive simply by collecting what they’re owed. For businesses concerned about keeping up with the ever-increasing pace and complexity of governments’ tax compliance and reporting regulations, Sovos provides solutions that safeguard them from the burden and risk of modern tax.”
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