Crypto tax startup ZenLedger is attempting to improve its ability to service its U.S. customers, who might be anxious when it comes time to file their taxes this year, by forging a new partnership with AI-powered tax software startup April.
With the growing interest in digital assets investing and trading, simultaneously, “cryptocurrency taxation has become increasingly complex, with individuals and businesses often juggling multiple tools and platforms to meet their tax compliance needs,” the two companies said in a statement.
Navigating tax liability with regard to the buying and selling of crypto continues to evolve in the U.S. as the Internal Revenue Service wrestles with how exactly it will treat the use of cryptocurrencies by both individuals and businesses. The IRS recently said people engaged in trade or business must now report any crypto transactions made of $10,000 and more, however, it was not crystal clear how exactly the new requirement will function.
By forging this integration with April — like TurboTax an IRS authorized e-file provider — ZenLedger aspires to create a simplified filing process on a single platform, the company said. “ZenLedger users will import their aggregated trade data into April’s platform with a single tap,” it also said.
“As of January 11, there were approximately 400,000 bitcoin transactions per day. By consolidating the entire tax experience into a single filing platform, traders can import their transaction data through a seamless user experience that reduces the risk of potential errors and inaccuracies,” said Ben Borodach, CEO and co-founder of April.
Growing need to avoid tax issues
In light of spot bitcoin ETFs being approved and maturing of the cryptocurrency market, Borodach expects demand for comprehensive, crypto-specific tax solutions to “accelerate in the U.S. market” with crypto traders becoming increasingly eager to feel confident when reporting their activity.
“The Treasury Dept is working to ensure all crypto exchanges and wallets report activity,” said ZenLedger co-founder and CEO Pat Larsen. “The IRS is going to increase audits in the future and the best way to protect yourself is to correctly file your taxes now, because audits can go back several years.”
The IRS has had its eye on crypto for a while now. In 2020, the agency decided to place a question about whether or not people owned digital currency at the top of its 1040 form.
ZenLedger’s investors have included Mark Cuban’s Radical Ventures, Bloccelerate VC and Three Point Capital. April launched a complete version of its solutions earlier this year.
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