Jake Benson is a former SAP consultant who implemented payroll solutions for outsourcing service provider Capgemini. When he realized no one had built a solution for calculating tax liabilities for digital currencies, he left that role to build the software himself.
That software, today known as LibraTax, helps users calculate taxes due to the IRS. It will also check their transaction history from their Bitcoin wallets. Users can select a transaction type from their transaction history: whether it was a sale or a purchase, donation, gift received or transfer. The tool applies one of four different cost basis methodologies and provides populated tax forms so that users can file their gains and losses with the IRS.
Benson has been involved in Bitcoin economy for about two and a half years. He used online resources to educate himself on the fast growing digital currency. He read Bitcoin founder Satoshi Nakamoto’s thesis and a number of articles and periodicals. In doing so, he taught himself about the Bitcoin ecosystem and how it operates.
Benson’s accounting software startup, LibraTax, was incorporated in March 2014 and focuses solely on digital currencies. He serves only individuals and enterprises in the digital currency economy. LibraTax has been featured in prominent media across the globe and Benson himself has spoken at numerous Bitcoin conferences regarding the subject of taxes and digital currencies.
Benson advises clients to respect tax compliance. The IRS has not yet started cracking down on the holders of digital currencies, but Benson believes that as the tax authorities get up to speed with what is going on, both businesses and individuals should take compliance seriously. His tool will enable Bitcoin holders to automate some of the accounting process and save a lot of time while facilitating compliance.
Benson is not discouraged by the U.S. government’s decision to regulate certain aspects of Bitcoin. He thinks it was a reasonable decision by the IRS. “They are not looking to shut down or hinder growth of the currency,” he says. “It’s not a special treatment of Bitcoin: it is treated fairly just like any other property in the United States.”
He urges Bitcoin professionals to do the necessary research and make sure they really understand the potential risks and benefits of Bitcoin. It’s easy for professionals to come up with ideas and make statements that will gain some media attention, but it’s important that this group of leaders does its homework first.
“I built this software because the onus of being a good citizen and a responsible taxpayer can be especially burdensome for digital currency holders right now,” says Benson. People, not the currency, he added, ultimately feel the pain point around any would be lack of clarity. LibraTax will eliminate much of the anxiety currently felt by those transacting in digital currency.”
The demand for efficient tax preparation by Bitcoin holders and merchants is growing exponentially.