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Crypto tax compliance startup TaxBit has raised $5 million in a seed funding round which saw participation from leading venture capital firms.
According to a press release, the round drew support from Fintech venture firm, TTV Capital, Dragonfly Capital Partners, Collaborative Fund, Winklevoss Capital, Valar Ventures, Global Founders Capital, Table Management, Album VC, and others.
Founded in 2018, TaxBit aims to enable widespread cryptocurrency adoption by automating the regulatory hurdle of tax compliance. It intends to use the fresh funding to further enhance its products and accelerate customer growth, both in the United States and internationally in regions including Canada, UK, and Australia.
Tax filing complexities
Filing taxes can be quite an intimidating process. The Internal Revenue Service (IRS) sent out audit notices to US cryptocurrency traders past summer, followed by new cryptocurrency tax guidance released in the fall. The regulator has also included a new question on its 2019 tax return form which requires all US taxpayers to attest whether they acquired, sold, or exchanged cryptocurrency at any point during the taxable year.
"Navigating cryptocurrency tax laws is a byzantine process. 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,” Winklevoss Capital Partner, Sterling Witzke, said.
TaxBit’s consumer and enterprise products
TaxBit said that its consumer product, launched last January, has helped thousands of cryptocurrency users automate their taxes. Often referred to as the "TurboTax of crypto”, the solution is easy to use, enabling users to produce all of their required crypto tax forms in minutes.
In 2019, TaxBit also rolled out its enterprise tax center suite that is now being deployed by cryptocurrency exchanges and merchants. The tax center suite facilitates tax compliance for enterprises and their users through a technology-driven platform.
Austin Woodward, CEO and Founder of TaxBit (as well as CPA) said that TaxBit will help remove the burden of proper cryptocurrency tax reporting from the shoulders of crypto users, exchanges, and merchants.
"TaxBit's software and tax experts will accurately handle all of the back-end complexities, while providing users with an intuitive, user-friendly experience on the front-end,” he said.
Last month, Thomson Reuters, in collaboration with Verady, announced a new cryptocurrency tax tool. It said that its GoSystem Tax RS product will soon launch a Virtual Currency Organizer that will help address the tax reporting issues related to cryptocurrencies.
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