DRAPER — Make no mistake, when it comes to nationwide mandatory annual tax filings, the Internal Revenue Service believes cryptocurrencies are most assuredly a thing.

And Utah tech startup TaxBit on Monday announced $5 million in new funding to continue growing its innovative software platform that’s aiming to help the growing number of cryptocurrency users and investors stay in good graces with the U.S. government’s tax collection agency.

Cryptocurrencies, like Bitcoin and ethereum, are internet-based mediums of exchange that use encrypted functions to conduct financial transactions. Cryptocurrencies have grown substantially since first appearing in 2009 and current estimates indicate there are over 2,300 different currencies being traded and used.

Starting with the 2019 tax year, the ubiquitous IRS “long form” 1040 includes the following question: “At any time during 2019, did you receive, sell, send, exchange or otherwise acquire any financial interest in any virtual currency?”

The simple inquiry leaves little to either imagination or interpretation and filers should know the IRS is expecting anyone who has had any financial dealings that involved the digital currencies, built on decentralized blockchain technology, is on the hook to detail those transactions and any subsequent financial gains or loses related to their use.

TaxBit co-founder and CEO Austin Woodward said the days of cryptocurrencies being too esoteric to earn the attention of taxing entities are well gone as an estimated 17 million or so Americans are dabbling in the digital currencies and Utah is among the top five states for per capita users.

“There’s been a misconception that crypto was untraceable and a vehicle for hiding income or evading taxes ... which really is not the case,” Woodward said. “What the reporting requirements are, and what you’re liable for in your filings, has been a point of confusion ... and the reporting can be very complicated.”

Woodward said TaxBit alleviates that confusion and was built to be the “TurboTax for crypto.” The platform, he said, syncs easily with a user’s digital wallet or crypto exchange account and automates the reporting process by pulling in necessary data and completing required tax reports.

TaxBit launched a year ago and while its main product is focused on individuals with cryptocurrency tax obligations, it has also created an enterprise product to assist crypto exchanges and merchants on the commercial side of the transaction universe.

The company’s $5 million seed fund included investments from TTV Capital, Valar Ventures, Dragonfly Capital Partners, Collaborative Fund, Winklevoss Capital, Global Founders Capital, Table Management and local venture capital firm Album VC which previously led TaxBit’s pre-seed funding round.

Winklevoss Funding is one of the efforts launched by Cameron and Tyler Winklevoss, the identical twins and former Harvard students made famous in the film “Social Network” about Facebook founder Mark Zuckerberg and the genesis of the social media behemoth. The Winklevoss’ reportedly leveraged $65 million in settlement money from a lawsuit filed against Zuckerberg to enter the cryptocurrency markets.

Sterling Witzke, partner at Winklevoss Capital, said TaxBit’s reporting solution will help alleviate a burden that has been a barrier for some interested in engaging with cryptocurrency.

“Navigating cryptocurrency tax laws is a byzantine process,” Witzke said in a statement. “TaxBit’s technology eliminates this confusion and complexity by allowing crypto owners to seamlessly understand the full picture of their tax liability through an intuitive and easy-to-use platform.

“Solving for this pain point is integral to accelerating cryptocurrency adoption, and we are thrilled to back TaxBit on this mission.”