TaxBit To Automate Crypto Tax Reporting Process

Crypto tax reporting platform TaxBit has managed to raise $5 million in seed funding order to automate the crypto tax reporting process. With funding participation from Winklevoss Capital, the venture firm run by twin brothers Cameron and Tyler Winklevoss.

On January 6, TaxBit announced its plans to use the raised funds to enhance its software, as their tax reporting tool has attracted large numbers of users. The firm is also going to boost customers growth in the United States and globally in regions including Canada, U.K and Australia.

TaxBit uniting CPAs, tax attorneys and software devs to create its crypto tax reporting tool

In January 2019 TaxBit launched ”TurboTax of crypto”, a service which automates tax payments for crypto users, merchants and exchanges. The firm’s CEO and founder Austin Woodward states that one of the most remarkable features of TaxBit is the team behind the service comprising certified public accountants (CPAs) and tax attorneys as well as software developers. This gives TaxBit a unique perspective, since most other firms are mostly developer-centered.

Woodward writes, that “TaxBit provides a full transaction by transaction audit trail that any CPA or IRS investigator in the event of an audit can easily verify the accuracy of a users’ tax calculations. Additionally, because we have certified accountants and attorneys on staff, we can facilitate any IRS crypto audits from start to finish, meaning we draft all of the IRS letters and correspondences so users don’t have to hire a CPA or attorney to do so.”

Sticking to IRS guidelines and keeping tax reports immutable

TaxBit’s official website states that the platform supports over 2,500 coins and includes important features such as API integrations or tax optimization tools. When asked about support of some specific crypto, Woodward confirmed that ”any coin that is available on an exchange or wallet trading platform” is supported. He also added that TaxBit managed to stick to new guidelines of the Internal Revenue Service and support all existing coins simultaneously.

The platform also provides a solution to the problem of the IRC frequently changing crypto tax reporting regulations — immutable audit trail. As it requires accounting systems to change tax rules, the firm is “constantly evaluating the best and newest technologies” such as blockchain in order to keep immutable, up-to-date and accurate tax reporting.

Dragonfly Capital is one of the investors

Besides Winklevoss Capital, the list of investors in the seed round included TTV Capital, Dragonfly Capital Partners, Collaborative Fund, Valar Ventures, Global Founders Capital, Table Management and Album VC. As TaxBit says, it represents changes in American viewpoint regarding cryptocurrency taxation and government regulation.

The IRS published its new crypto tax reporting guidelines back in October 2019, asking some 150 million American taxpayers about their cryptocurrency transactions. According to some estimations, the IRS expects roughly 12 million tax returns to contain some form of cryptocurrency investment.