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New solution makes tax filing easier for bitcoin users

Cloud-based solution from Avalara, Inc. helps companies that accept bitcoins comply with tax laws

The rise in popularity of the crypto-currency bitcoin has been a boon for many, but has carried with it a number of issues. Setting aside the public’s association of bitcoin with illegal activity, issues with theft and bankruptcy and ongoing debates about bitcoin regulation, there is also the issue of the taxability of the virtual currency. 

This spring, the Internal Revenue Service declared that bitcoins should be treated as property for income tax purposes, which caused a bit of a headache for individuals who transact in large amounts of the currency. But, for merchants who accept bitcoins, there are tax issues as well. For example, how does one comply with sales tax regulations? 

One solution to that dilemma has come from Avalara, Inc., a company that offers a cloud-based solution that calculates sales tax for businesses, even when those sales are conducted using bitcoins.

Sales tax regulations can be complex to begin with, but adding in a wild card like bitcoin can add new wrinkles. The solution, according to a spokesperson from Avalara, is designed to make compliance with tax regulations as simple as possible. 

Avalara is clearly trying to get ahead of the curve here, as bitcoin is at a bit of a crossroads. If it can shake some of the issues that have plagued it recently, the currency is poised to become a huge factor in the economy of the future. If that happens, then Avalara’s solution should be well received by companies that wish to welcome the currency but wish to make their accounting matters as simple as possible.

 

More on bitcoin:

 

IRS says to treat Bitcoin as ‘property’ for tax purposes

Digital currency exchange Mt. Gox files for U.S. bankruptcy protection

Debate about bitcoin regulation goes global

Bitcoin gains legal, financial interest

 

 

Managing Editor

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Rich Steeves

Richard P. Steeves is Managing Editor of InsideCounsel magazine, where he covers the intellectual property and compliance arenas. Rich earned a B.A. in English Literature...

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