Tax information for Code4rena contributors (wardens, judges, etc) #146
Replies: 7 comments 6 replies
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Just forwarding a nuanced (and maybe not yet answer-able) question from the community in regard to the questionnaire.
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Good questions, thanks! We'll begin requiring the form to be filled out before receiving payments for audits that started on Feb 10th or later. We haven't placed restrictions on payments for audits that began prior to this announcement. To be clear, in order to fulfill our obligations, we need everyone who's received an award to fill it out, and we'll be sending a link to participants of past audits to complete the questionnaire. |
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Hey @sockdrawermoney, In my opinion, it would be good to also add the business address to which participants can write receipts to here. For example in my country I need to write a receipt for each transfer I receive to be tax compliant. It would be good if new participants could find this address /business name directly and wouldn't need to ask support for these. |
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Will do this in our docs as well, but for convenience here: Code4 Corporation You can email them to: admin -a-t- code4rena -d-o-t- com |
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Also, if you have any questions you'd like to ask privately, feel free to email me: eric -a-t- code4rena -d-o-t- com. |
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What information do you need? pls explain more detail |
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We will be sharing more detail in the next week or so. |
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Any other news regarding the update? |
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We've been in the process of changing how the info is intended to be collected for logistics reasons. I believe the requested info will essentially be the same as what goes into a W-9 form (US wardens) and a W-8 form (non-US wardens). |
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After completing the document, where should I upload it? |
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We'll have a way to provide the info directly. You won't need to fill out the IRS's PDF form. Stay tuned. |
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If I don't provide the information, will the reward be accumulated? or lost? |
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tl;dr
Full details below.
Summary
In order to best support community member U.S. tax reporting obligations, as well as its own, Code4rena has implemented a new process for collecting the necessary information and filing any necessary forms. As you will see below, we have made significant efforts to protect member privacy, while ensuring that we adhere to the requirements of the law and assist community members in doing the same.
Tax information for competitive audit participants
Starting in 2024, as part of its onboarding of competitive audits participants (e.g., wardens, judges, scouts, etc.), Code4 will provide competitive audit participants a link to complete a questionnaire for the purposes of determining what, if any, U.S. reporting or withholding obligations exist. Past participants will also need to fill out the questionnaire to continue participating in competitive audits.
As Code4 is the payor of the competitive audits awards, it has the ultimate responsibility for the collections of the information and the reporting forms being provided to the U.S. Internal Revenue Service (IRS). This may also include withholding taxes from the payments in some situations, including where the necessary tax information has not been provided or where the competitive audit award is subject to U.S. tax.
Code4 prioritizes participant privacy
Although Code4 being a U.S. entity makes the analysis for its responsibility very clear, even if the competitive audits were wrapped in an international jurisdiction or remained entityless, Code4 would still be subject to U.S. tax information reporting obligations because of the nature of the underlying activity.
There has been significant recent legislation specific to the required information reporting of crypto. However, even beyond the crypto considerations - the past 25 years has seen a major push by the U.S. and most international jurisdictions to increase information reporting responsibilities related to ownership/control and the transfer of funds.
It should be noted that while Code4 is deeply committed to compliance, we have serious reservations on the method and scope of the existing requirements around information reporting and particularly, the trend of recent legislation targeting crypto transactions. Code4 has and will continue to advocate for a fair system of information reporting that better accounts for online transactions involving crypto.
Regarding its specific obligations for 2023, Code4 has worked with its advisors and S&P Global to design a system of collecting information that is compliant while also protecting the privacy of the competitive audits participants. All contest participants will shortly be receiving a link to S&P’s Tax Information from Code4 to complete a questionnaire.
In normal operations, Code4 communicates with S&P Global (through an Account ID designed to retain privacy) and its competitive audits participants by handle (which is never shared outside Code4) and does not have routine access to name, address or Tax Identification Number. However, Code4 retains the ability to access the provided information for required regulatory reporting, audit and review of process, or in the event of an enforcement action, audit or valid subpoena.
Additionally, all forms filed will be prepared in whole numbers and in aggregate of all payments, so even a breach of the Treasury Department would not result in personal information being easily (if at all) traced to individual wallet activity.
The information collection system has been designed with internal controls to ensure that the correct information is being obtained and that any required reporting is being performed properly and all provided competitive audits information is maintained by S&P Global in compliance with their rigorous policies on Data Privacy and Cybersecurity.
Tax information reporting
Broadly speaking, tax information collected for U.S. tax purposes is commonly referred to as forms:
However, a more comprehensive and accurate answer is that forms W-9 and W-8 (e.g., W-8BEN, W-8BEN-E, W-8IMY, and W-8EXP) collect an assortment of information used to identify individual or entities to confirm tax residency, assist in the collection of tax, certify tax reporting status as domestic or foreign, provide the necessary information to determine domestic and international reporting requirements, and claim tax treaty benefits to reduce withholding rates.
By utilizing the questionnaire format, the competitive audits participants avoid having to determine, complete and return the appropriate form because the questionnaire guides them through the requirements dependent on the answers provided.
Like forms W-9 and W-8, the questionnaire itself is not typically submitted to the IRS, but depending on the answers provided, the information may be used to:
United States competitive audits participants
Competitive audits participants who are citizens of the U.S. / residents of the U.S. and earn more than 600 US dollars in a tax year, will receive a 1099-NEC before January 31 of the next calendar year.
For tax year 2023, the 1099-NEC’s will be prepared and mailed by S&P Global.
Although we intend to revisit the mechanism of accommodating online delivery of forms – for this year, the paper delivery option allowed for a more streamlined process.
International competitive audits participants
If the competitive audits do not take place in the United States and the audit participants are not present in the United States – the expectation is that the information provided within the completed questionnaire will result in Code4 only being required to demonstrate that it attained sufficient information to determine that competitive audits participants did not have a U.S. withholding and/or reporting obligation.
Assistance in completing the questionnaire
Although Code4 and its advisors cannot give legal or tax advice to individual participants – we are available to answer any questions for competitive audits participants to help them through the process and explain the mechanisms in as much detail as necessary to assist in completing the S&P Global questionnaire.
Next Steps
Be on the lookout for a communication from Code4 regarding the completion of the S&P questionnaire and feel free to reach out with any questions on this subject.
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