Crypto Appeal Tests Ability to Challenge IRS Positions in Court

An appeals court will consider Wednesday whether the IRS had the power to end a couple’s lawsuit over cryptocurrency tax policy by sending them a refund check.

Joshua and Jessica Jarrett want the US Court of Appeals for the Sixth Circuit to revive their lawsuit after a Tennessee federal court ruled in 2021 that the refund check eliminated any case or controversy on which to rule. The pair argue that cryptocurrency tokens created through “staking"—where someone uses existing tokens and computing power to validate cryptocurrency transactions and create new tokens—shouldn’t be taxed as income until they’re sold or exchanged.

But ...