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US: IRS Declares Crypto Earned via Microtasking is Taxable I...
NEWS

US: IRS Declares Crypto Earned via Microtasking is Taxable Income

The U.S. Internal Revenue Service (IRS) continues to keep a keen eye on crypto-transactions.

IRS to Tax Crypto Earned via Microtasks

According to a report by The Block, the U.S. tax watchdog is set to tax cryptocurrencies earned via microtasking jobs. The IRS’s Office of Chief Counsel has published a response to a request on June 29 that seeks clarification from the Small Business/Self Employed Division.

A memo by the IRS published on August 28 notes that cryptocurrency earned from microtasks conducted on crowdsourcing platforms is now considered taxable income. The memo filed earlier asked the question “Is convertible virtual currency received by an individual for performing a microtask through a crowdsourcing or similar platform taxable?”

In response, Ronald Goldstein of the Income Tax and Accounting Division noted:

“Yes, a taxpayer who receives convertible virtual currency in exchange for performing a microtask through a crowdsourcing platform has received consideration in exchange for performing a service, and the convertible virtual currency received is taxable as ordinary income.”

Goldstein added:

“Other examples include an offer of convertible virtual currency in exchange for downloading a particular app from an app store and leaving a positive review including a comment, downloading games and reaching certain milestones, completing online quizzes and surveys, or registering accounts with various online services. These types of microtasks may provide individuals with “rewards” in the form of convertible virtual currency. The value of convertible virtual currency paid in exchange for a single microtask often is a small amount that may be less than $1.”

Further, he added that under Section 61 (a) (1), gross income includes all income from whatever source derived, including compensation for services. Under this section, all gains that are clearly realized and over which a taxpayer has complete dominion, are included in gross income.

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Crypto Microtasks Under the Tax Lens

Clearly, the IRS is leaving no stones unturned to ensure all those who hold cryptocurrencies are brought under the taxation lens. The latest decision to tax crypto micro-transactions is an attempt to further tighten the taxation noose around cryptocurrency holders.

Goldstein added:

“A taxpayer who performs a task through a crowdsourcing platform, including a microtask, has performed a service for the party that requested the task with the expectation that he or she will receive compensation. If the taxpayer receives convertible virtual currency for performing the task, regardless of the value and the manner in which it is received, then the taxpayer has been compensated with property.”

Notably, the IRS already considers bitcoin and other cryptocurrencies to be a form of taxable property.

In related news, As reported that the IRS was asking every U.S. resident if they used cryptocurrencies for any purpose, whatsoever.

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