Tennessee Court Renders Crypto Tax Dispute Moot

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A Tennessee Court dismissed the complaint filed against the IRS by a pair of plaintiffs seeking refunds for the income tax on their Tezos tokens.

In 2019, Joshua Jarrett, a Tennessee SmartGym owner, created 8,876 Tezos (XTZ) tokens by verifying transactions thanks to its Proof-of-Stake (POS) model. He paid an income tax of $3,790 for retaining these tokens.

In 2020, Joshua and Jessica Jarrett petitioned for a refund. They claimed the Tezos tokens should not be considered taxable income as the pair did not sell them.

Last year, the U.S. DOJ authorized the IRS to issue the income tax refund. The plaintiffs denied this offer in order to "continue vindicating their rights in court.” 



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However, the IRS had already issued a $4001 check to their account by the end of January. This included $3,790 as refunds and $208 as interest. The pair also refused to accept the amount.

As a result, the court has rendered the Jarretts’ lawsuit moot, with the court filing stating,

“The Court finds no reasonable expectation that Plaintiffs will be subject to the same action again. [The] instant controversy was limited to whether Plaintiffs were entitled to a refund of taxes paid for the 2019 tax year.

To conclude, the Court has dismissed the complaint as the IRS had already refunded the income tax in addition to the statutory interest.

Written by
Ayush Pande

A Tennessee Court dismissed the complaint filed against the IRS by a pair of plaintiffs seeking refunds for the income tax on their Tezos tokens.

In 2019, Joshua Jarrett, a Tennessee SmartGym owner, created 8,876 Tezos (XTZ) tokens by verifying transactions thanks to its Proof-of-Stake (POS) model. He paid an income tax of $3,790 for retaining these tokens.

In 2020, Joshua and Jessica Jarrett petitioned for a refund. They claimed the Tezos tokens should not be considered taxable income as the pair did not sell them.

Last year, the U.S. DOJ authorized the IRS to issue the income tax refund. The plaintiffs denied this offer in order to "continue vindicating their rights in court.” 



Get Our Free Newsletter

Subscribe to our newsletter to get tips, our favorite services, and the best deals on Bitcompare-approved picks sent to your inbox


However, the IRS had already issued a $4001 check to their account by the end of January. This included $3,790 as refunds and $208 as interest. The pair also refused to accept the amount.

As a result, the court has rendered the Jarretts’ lawsuit moot, with the court filing stating,

“The Court finds no reasonable expectation that Plaintiffs will be subject to the same action again. [The] instant controversy was limited to whether Plaintiffs were entitled to a refund of taxes paid for the 2019 tax year.

To conclude, the Court has dismissed the complaint as the IRS had already refunded the income tax in addition to the statutory interest.

Written by
Ayush Pande