WHITE PAPER 2 - taxtoken.io · TAXTOKEN WHITE PAPER 2.0. WHA AXTOKEN ... Why an Initial Token Sale? Ensuring ... to every receipt throughout the year is simply not feasible for the

Copyright © 2017 TaxToken LLC

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WHAT IS TAXTOKEN?TaxToken is the first company to leverage blockchain technology with artificial intelligence to modernize personal accounting. The TaxToken team noticed serious problems with taxation methods. The current way of doing taxes is time consuming, costly, and outdated.

At TaxToken, we believe taxpayers shouldn’t have to keep a meticulous record of receipts and hire expensive accountants to take advantage of the tax code. TaxToken is the automated, intuitive solution.

The TaxToken suite, using our patent pending processes, will provide users with the essential tools they need to save both time and money. Through integration with smart cards, mobile phones, wallets, and exchanges we will autofill users tax forms.

We realize that for many people taxes can be frustrating and complicated. Advances in blockchain technology allow us to change that. Triple entry bookkeeping combined with decentralized, distributed ledgers allow us to re-define how taxes are done.

Our vision is a secure, accurate, and automated taxation process. From daily transactions, such as capital gains and losses and itemizing deductions, or more unique events, like selling your house or paying for college, we can help.

TAXTOKEN

W H I T E PA P E R 2 . 0

WHAT IS TAXTOKEN?TaxToken is the first company to leverage blockchain technology with artificial intelligence to modernize personal accounting. The TaxToken team noticed serious problems with taxation methods. The current way of doing taxes is time consuming, costly, and outdated.

At TaxToken, we believe taxpayers shouldn’t have to keep a meticulous record of receipts and hire expensive accountants to take advantage of the tax code. TaxToken is the automated, intuitive solution.

The TaxToken suite, using our patent pending processes, will provide users with the essential tools they need to save both time and money. Through integration with smart cards, mobile phones, wallets, and exchanges we will autofill users tax forms.

We realize that for many people taxes can be frustrating and complicated. Advances in blockchain technology allow us to change that. Triple entry bookkeeping combined with decentralized, distributed ledgers allow us to re-define how taxes are done.

Our vision is a secure, accurate, and automated taxation process. From daily transactions, such as capital gains and losses and itemizing deductions, or more unique events, like selling your house or paying for college, we can help.

“The first generation of the digital revolution brought us the Internet of information. The second generation — powered by blockchain technology — is bringing us the Internet of value: a new platform to reshape the world of business and transform the old order of human affairs for the better.”

-Don Tapscott

“We believe that the economy works best when it works for everyone, and this new platform is an engine of inclusion.”

-Don Tapscott & Alex Tapscott

CONTENTS

What is TaxToken?

The Problem

The Solution

The TaxToken Interface

Privacy and Security

Inherent Integrity of the Blockchain

Competitive Advantage

Finances / Market Opportunity

Product Comparison Sheet

Why an Initial Token Sale?

Ensuring Accuracy

Moving Forward

Token Deployment & Plan

Token Ecosystem

The TaxToken Promise

Roadmap

TaxToken Team

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Copyright © 2018 TaxToken Co.

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WHAT IS TAXTOKEN?TaxToken is the first company to leverage blockchain technology with artificial intelligence to modernize personal accounting. The TaxToken team noticed serious problems with tax filing methods. The current way of doing taxes is time consuming, costly, and outdated. As a result, taxpayers often default to the standard deduction, which means they may not be taking full advantage of the tax code to maximize their refund.

At TaxToken, we believe taxpayers have the right to pay only their legal due of taxes. Taxpayers shouldn’t have to keep a meticulous record of receipts or hire expensive accountants to pay only their fair share of taxes, nor should they be left with overestimating their tax burden through the simple, standard deduction. TaxToken offers taxpayers an automated, intuitive solution to pay just the amount of taxes they owe and maximize the earnings they deserve.

The TaxToken suite, using our patent-pending processes, will provide users with the essential tools they need to save both time and money. Through integration with smart cards, mobile phones, wallets, and exchanges, TaxToken will autofill users’ tax forms.

We realize that for many people taxes can be frustrating and complicated. Advances in blockchain technology eliminate these frustrations. The emergence of triple entry bookkeeping and the decentralized, distributed ledgers intrinsic to the blockchain will re-define personal accounting and tax filing methods.

Our vision is a secure, precise, and automated tax preparation process. From daily transactions--like capital gains/losses and itemizing deductions--to more unique financial events--like selling your house or paying for college--we can help.


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THE PROBLEM“Over 2 million taxpayers could have saved nearly 1 billion dollars by itemizing their deductions.”

Every year, millions of Americans lose potential tax savings by incorrectly choosing the standard deduction rather than itemizing their deductions. To itemize deductions properly, taxpayers would need to maintain precise records of personal spending throughout the year. According to TurboTax, keeping receipts is the best way to track annual spending. However, holding on to every receipt throughout the year is simply not feasible for the majority of Americans. In reality, many receipts are lost and deductible expenses go un-itemized. In the case of charitable contributions, acquiring proof of donation for lost or unrecorded receipts is costlier than the deduction.

The roughly 30% of households who do itemize deductions often overpay tax professionals to sift through unorganized financial records and receipts. Often, the use of a tax professional negated or even outweighed the resulting tax savings.

One commonly overlooked itemization includes charitable donations. In fact, charitable contributions make up a significant portion of the $1 billion in un-itemized deductions. This is partly due to stringent requirements of the IRS for itemizing charitable donations. For cash donations under $250, the IRS requires a bank record or a written communication containing the name of the organization, the amount, and the date of the contribution. Tough itemization standards are partially responsible for a decline in donations by low and middle-income households. Also to blame is a general lack of transparency in donation processes, high transaction fees when donating, and the misappropriation of funds.


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THE PROBLEMAs an unfortunate result, many individuals are less inclined to donate to charity. Genuine charities thus suffer from poor public trust in charitable organizations and lose many potential contributions. Meanwhile, taxpayers are deprived of the opportunity to give back to their communities through charitable donations and subsequently lower their tax burden by itemizing such donations.

Finally, there is a problem regarding the taxation of virtual currency in the US and the reporting of crypto capital gains and losses. Incredibly, only 802 people reported a crypto capital gain or loss in 2015. This statistic is very concerning to the IRS, as buying goods and services with virtual currency, selling on an exchange, or selling to another person are all taxable events.

Coinbase, the largest US exchange with roughly 11.5 million users, felt the brunt of this concern. The IRS issued a John Doe summons to Coinbase, attempting to gather information on millions of taxpayers. When Coinbase refused to comply with the summons, the IRS filed a federal lawsuit. Although the scope of the summons has recently been narrowed, many taxpayers are still left worried about the future.

TaxToken believes this underreporting results from confusion over the regulatory environment and the high level of expertise required to track crypto capital gains and losses. The infrastructure for easily reporting crypto capital gains and losses has not yet been developed.


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THE SOLUTIONTaxToken wants to simplify and automate all aspects of a painstaking taxation process. Our team envisions a not so distant future where all taxable transactions occur on the blockchain. In this reality, TaxToken’s software will automatically file your taxes for you, eliminating the need for manual record keeping and expensive tax professionals. The following is how we plan on making our vision a reality.

TaxToken Integration with Wallets and Smart Cards68.5% of Americans choose the standard deduction. Millions of Americans do not claim their eligible tax deductions, while millions more overpay tax professionals. Fortunately, continuous innovation in mobile and smart payments has opened up exciting new solutions. Integrating our blockchain-inspired software with wallets and smart cards promises a better way for Americans to claim their tax deductions.

When individuals use smart credit cards, every transaction is stored on the blockchain. Our software will scan the blockchain and pull your entire transaction history. TaxToken’s algorithm then sorts, files, and itemizes the transactions. The results are imported to the 1040 form, no manual entry required!

Wallet integration works similarly. A wallet has an aggregated list of all your blockchain transactions. Users would simply allow us access to their wallet, answer a few questions, and our software will do the rest by sorting, filing, and itemizing transactions.

TaxToken’s software streamlines a previously inefficient itemization process. Our clients will itemize their deductions by simply downloading our app and swiping a smart credit card. For the first time ever, Americans can itemize deductions without the bother of holding on to a single receipt. Should clients choose to hire a tax professional, our software is still valuable. It is far less costly and more efficient for a tax professional to audit an organized list of blockchain-verified deductions provided by TaxToken than to sift through countless unorganized paper documents. By removing some of the largest obstacles to maximizing tax savings-- receipts and expensive tax professionals--we help clients save both time and money.


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THE SOLUTIONPatent-Pending Capital Gains and Losses Tracker With the rapid advancement of blockchain technology, the IRS has left many doubts regarding future reporting of assets. The IRS has left no doubt, however, about its growing interest in a $175 billion market. Confusion over how exactly cryptocurrencies are taxed, combined with no streamlined process for tracking cryptocurrency capital gains and losses, has left many taxpayers looking for answers.

To ensure our users’ financial well being, we have developed an automated, easy-to-use capital gains and losses calculator. Our calculator will work seamlessly with phones, computers, wallets, and smart cards to track and categorize your capital gains, capital losses, and all IRS rulings and exemptions surrounding the categorization of [U.S. Code § 1221 - Capital Asset Defined].

We recognize the importance of staying up to date with regulatory requirements in such a dynamic environment. As rules and regulations change, appropriate updates will be made to ensure compliance with the latest laws and IRS regulations. TaxToken’s machine learning combined with our professional expertise aims to deliver an adaptable, reliable, and IRS-friendly solution.

Selling on an exchange

Selling to another person

Buying goods or services


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THE SOLUTIONFor those interested, the following two paragraphs give a brief overview of the current regulatory environment in the United States.

With cryptocurrencies year-over-year taking a larger percentage of investment market share, attention from the SEC and IRS was inevitable. On July 25, 2017, SEC Chairman Jay Clayton issued an official statement reading: “We seek to foster innovative and beneficial ways to raise capital, while ensuring – first and foremost – that investors and our markets are protected.” While Mr. Clayton’s words are promising, the SEC’s retroactive approach coupled with unclear IRS policy has both the crypto-community and US government agencies seeking direction. The IRS has been heavily criticized for inaction. The Treasury Inspector General for Tax Administration (TIGTA) released a scathing report recommending the IRS to “Revise third-party information reporting documents to identify the amounts of virtual currencies used in taxable transactions.”

Blockchain technology has quickly outpaced the law, and investors are practically screaming for clarity from lawmakers and the IRS. In 2014, the IRS announced in Notice 2014-21 that virtual currency is to be treated as “property” and not “currency” for US federal tax purposes. This ruling relied on the fact that, at the time, virtual currency did not have legal tender status in any jurisdiction. However, virtual currency has since gained legal tender status, most recently with Japan’s declaration of bitcoin as a legal tender or payment method. To further complicate matters, and in complete divergence from IRS rulings, some US courts have held that bitcoin is “money” for regulatory purposes. See U.S. v. Faiella (2014) and U.S. v Murgio et al. (2016). Finally, as recently as July 25, 2017, the SEC ruled DAO tokens “were securities and therefore subject to the federal securities law.” While it appears that ICOs will be evaluated on an individual basis for now, conflicting SEC, IRS, and US court rulings emphasize a need for future clarity and direction.


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THE SOLUTIONPatent-Pending Text-To-Block Technology for Charitable ContributionsCurrently, itemizing donations is time consuming and subject to strict requirements. These drawbacks combined with lack of donation transparency are to blame for the steadily declining charitable contributions of many Americans as well as one billion dollars in un-itemized deductions.

Text-to-block technology is TaxToken’s total solution. Simply text a number affiliated with the charity’s wallet, enter the donation amount, and the process is complete. Virtual wallets, paired with both cryptocurrencies and fiat money, can be utilized by charitable organizations with a registered wallet on the blockchain. Your contribution will occur on the blockchain in real time, managing multiple currencies and exchanges rates, with negligible fees. TaxToken’s software will locate the user’s virtual wallet, validate the proof of donation, and calculate the contribution in to future tax savings. The donation will have been organized and itemized, automating the process while complying with IRS requirements.

It is a commonly accepted fact that in order for blockchain technology to reach full potential, it needs to become widely adopted. We believe text-to-block technology provides tangible, real world value. Many individuals are hesitant about giving funds to charities, because they are unsure about the use and effectiveness of their donation. The blockchain’s immutable, distributed ledger provides complete transparency. Text-to-block technology will restore confidence in donors that their contributions are being used as intended. Text-to-block technology is also very easy to use, more so than filling out an online form or typing in a credit card number. It is TaxToken’s hope that a simple-to-use, transparent method of donating and itemizing will promote future generosity.

Applied Artificial IntelligenceApplied Artificial Intelligence is best used in systems requiring high layers of abstraction. Although not obvious, the taxation process is a fantastic candidate. The taxation process is not at all rigid and unbendable, but instead rife with estimations and strategy. To put it candidly, accountants are paid high salaries to take advantage of “wiggle room,” saving clients money through strategic thinking.

TaxToken will look to artificial intelligence to continue to push the boundaries of what is possible and expected in accounting software. TaxToken intends on having our AI scan your transaction history and make recommendations to take advantage of “wiggle room.” Based on your previous spending habits and tax aggression strategy, our recommendations will save you the most money.


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THE TAXTOKEN INTERFACESimply log onto our computer client or Tax Token App. Answer a few easy questions about your current filing status and spending habits and select your tax aggression level. Next, allow the client access to your smart card, exchange, wallet, or mobile payment system. Our AI software will take care of the rest. With the information given through smart contracts and our quick-sort technology, we can immediately categorize each transaction and upload it to your personalized ledger. TaxToken will then explain each transaction to the end-user and recommend if it should be used in itemizing your deductions.

Simply log onto our computer client or

TaxToken app.

Answer a few easy anonymous questions about your current

filing status and spending habits.

Don’t worry--we don’t store your information!

Next, allow the client access to your smart card or mobile payment you

would like us to filter through.


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PRIVACY AND SECURITY

INHERENT INTEGRITY OF THE BLOCKCHAIN

Recent events have illustrated to the public the risk of letting large organizations store their information. The disastrous Equifax hack has compromised over 143 million Americans’ personal data. While Equifax is certainly to blame, their actions are a symptom of a bigger problem--centralized storage of data. At TaxToken, protecting customers’ privacy is of the upmost importance, which is why a large, centralized database is a risk we are unwilling to take. Our product uses a combination of decentralization and private keys to mitigate risk and ensure the protection of sensitive consumer data.

Transactions are unalterably recorded on the blockchain. Since all transactions are distributed and cryptographically-sealed, falsifying or destroying them to conceal activity is essentially impossible. This inherent integrity is why blockchain transactions will count as evidence for itemizing deductions. The process is similar to a transaction being verified by a notary – only in an instantaneous, electronic manner. The intrinsic immutability of the blockchain makes proving the integrity of electronic files easy. One approach is to generate a hash string of the file. The hash string represents the digital fingerprint of that file. That fingerprint is unchangeably timestamped by writing it into the blockchain via a transaction. At any subsequent point in time, the integrity of that file can be proven by again generating the fingerprint and then comparing it with the original fingerprint stored in the blockchain. If the fingerprints prove identical, then that document has remained unaltered since first writing the hash to the blockchain.


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COMPETITIVE ADVANTAGE

FINANCES / MARKET OPPORTUNITY

TaxToken is the first company to apply advances in blockchain technology to personal accounting. Integration with this disruptive technology places TaxToken at the forefront of a blockchain revolution. TaxToken’s forward innovation positions us to become the premiere blockchain tax solution. Our exclusive software provides a competitive edge in a multi-billion dollar market. See the proceeding page for a comparison of the TaxToken product against the two leading competitors for filing personal tax returns.

Our team understands TaxToken is entering a massive, established market. Last year, 86% of nearly 132 million tax returns were filed through tax software or online tax products. Currently, we have two main competitors for filing personal tax returns--Intuit, the creators of TurboTax, and H&R Block. These corporations combine for a market cap of more than $42.5 billion.

In 2016, the IRS issued more than 102 million tax refunds (out of 140 million individual returns), with the average refund totaling greater than $2,700. Sadly, most Americans do not realize that a large refund from the IRS is a mismanagement of their cash flow. The government holds on to taxpayers’ hard earned dollars until their end-of-the year federal tax refund. Essentially, this gives the IRS an interest-free loan. Over 70% of all Americans could be incorrectly filing their taxes. Furthermore, 78% of Americans are living paycheck-to-paycheck, which complicated tax laws do nothing to help. Clearly, there is room for improvement in the personal accounting and tax preparation industries. At TaxToken, we aim to keep your hard earned money in your own hands.

Furthermore, the Coinbase and IRS debacle has also demonstrated a need for a user-friendly capital gains and losses tracker. TaxToken feels confident that many Americans will soon become interested in tracking their capital gains and losses in a “good faith effort,” protecting themselves from an increasingly litigious IRS.


TaxTokenFeature Turbo Tax H&R BlockPrice

Smart Card Integration

Time Required on Tax Preparation

Automatic Charitable Donation Tracking with Onboarded Charities

100% Verifiable, Automatic Financial Record Keeping

Automatic, On-Demand Generation of Receipts

Automatic, Personalized Itemizations & Deductions

Currencies

Automatic Itemization of Coinbase Wallets

Text to Donate Feature for Charitable Contributions***Patent pending

Free for federal standard deduction forms

$45 for full product capabilities, including fully itemized deductions and filing recommendations (no restrictions)

*Free for individuals with an income of $13,000 or less*Free for families with a total income of $25,000 or less

Instantaneous record generation and form population**The IRS estimates taxpayers spent

on average between 5-15 hours preparing and submitting taxes in 2016.

Varying hours record keeping; 2-4 hours on average for form completion and submission

Varying hours record keeping; 2-4 hours on average for form completion and submission;Varying hours for in-person consultations

via unalterable blockchain technology and smart card

integration

via AI technology and smart card integration

charitable contributions require individual tracking

and manual entries

charitable contributions require individual tracking

and manual entries


$29.99 per each state standard deduction form

$54.99-149.99 for itemized deductions and other tax form options


$29.99 per each state standard deduction forms

$54.99-89.99 for itemized deductions and other tax form options

Varying hourly costs and flat fees for in-person tax professional services

Comparison of the Top Tax Filing Products with TaxToken

Fiat currenciesCryptocurrencies




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WHY AN INITIAL TOKEN SALE?

ENSURING ACCURACY

MOVING FORWARD

Rather unique to the ICO process, TaxToken already has two beta products, 1) a capital gains and losses tracker and 2) text-to-block technology. These processes, along with pending patents, have allowed TaxToken to secure funding from accredited investors. However, actualizing our vision of a completely automated taxation process will take a significant amount of time and resources. Furthermore, TaxToken doesn’t just want to deliver on our promises, we want to exceed expectations. Doing so necessitates developers, accountants, marketing personnel, designers, and many others. Naturally, this will require additional funding.

A theme throughout our white papers and in our business model is giving back to the community and making a difference. Instead of a more traditional venture capital round, TaxToken is delighted to offer a token sale. Through this process, the community we care so deeply about can participate in our success story. Together, we can achieve something great.

To bridge the interim period of beta and fully functioning products, we will look to professional accounting software such as Prosystemtax. Cross-validating our auditable data trails in this manner maximizes efficiency and productivity, while providing users with the highest level of assurance and compliance with IRS regulations.

The success of our vision is based on the widespread assimilation of blockchain technology, not necessarily the adoption of digital currencies. This is a very important distinction to make. The dramatic fluctuations of the cryptocurrency market, hard forks, or arguments about the intrinsic value of Bitcoin do not affect TaxToken.

Our business model is partly predicated upon the adoption of smart credit cards, or blockchain integrated credit cards. Already, large companies such as Mastercard and VISA are testing blockchain compatible credit cards, moving smart credit cards from the theoretical world to the real world. The transition to smart credit cards provide a host of benefits to credit card companies and TaxToken’s software will capitalize on this trend. As TaxToken secures a foothold in the US market share of the tax preparation industry, we will look to expand to international markets.


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TOKEN DEPLOYMENT & PLANThe Pre-launchDuring our Pre-launch, we will offer 51% of all TAX tokens for purchase by the public in the TaxToken Initial Token Sale under the ticker symbol TAX. Additionally, 29% of all TAX token to be created will be retained by TaxToken for community initiatives, auditing procedures and substantive analytics, academic research, etc. This means that over time, 80% of tokens will be owned by the public. We encourage you to look at a more specific breakdown of this information on the following page.

The remaining 20% of TAX tokens to be created will be distributed amongst TaxToken’s founders, employees, and early participants. It is important to offer the most competitive packages to our future employees, so that we may produce spectacular results. Tokens will be used to compensate future employees as well as ensure the continued alignment of interests between token holders and TaxToken. Further details of the distribution of tokens are set out below:

Each TAX token will be sold for 1/350 ETH, meaning 1 ETH will give you 350 TAX tokens.

Other accepted cryptocurrencies will be converted live in ETH.

There is a minimum purchase amount of 10 TAX tokens per purchase.

The pre-launch contribution timeline begins 21 days before the launch.

Within the first 24 hours, early participants will receive a 25% bonus with their contribution. The following 2 days, participants will receive a 20% bonus with their contribution. The next 4 days, participants will receive a 15% bonus with their contribution. The next 7 days, participants will receive a 10% bonus with their contribution. In the remaining 7 days, participants will receive a 7.5% bonus with their contribution. These pre-launch contribution bonuses are summarized below:

+25% - first 24 hours

+20% - day 2 and day 3

+15% - day 4 to day 7

+10% - day 8 to day 14

+ 7.5% - day 14 to day 21

Pre-ICO Soft Cap = 4 Million TAX

Pre-ICO Hard Cap = 7 Million TAX

ICO Soft Cap = 20 Million TAX

ICO Hard Cap = 35 Million TAX


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TOKEN DEPLOYMENT & PLANCurrently based on recent news and SEC scrutiny, TaxToken has decided to use traditional funding methods in order to further TaxToken’s expansion. After necessary clarity and guidance has been released by the SEC, we will further our desire for our Token Generation Event if deemed appropriate.

The LaunchIn the event that TaxToken proceeds with a Token Generation Event, the initial conversion price will be 1 ETH = 350 tokens. During the first day of the token crowdsale, we will offer an early bird 5% increase, in which 1 ETH = 367.5 TAX. Following that, the price will remain at 1 ETH = 350 TAX for the first 24 hours. The price will then increase 5% each 24 hours for 30 days or until all tokens are sold. For example, the day after 1 ETH = 350 TAX, 1 ETH = 332.5 TAX.

Token BreakdownPublic Distribution 80% - Among our token sale, community initiatives, and business development, the vast majority of tokens will be distributed to the public. This will help facilitate positive development of the ecosystem as a whole.

You the People - 51%TaxToken knows it is imperative to develop a thriving community while we operate in an open, transparent manner. TaxToken intends on working together with our community to achieve a mutually beneficial goal. That is why it was important to us for the community to own more than half of the tokens from the very beginning.

Community initiative - 20%10% of the tokens will be used to help families within 10% of the poverty line file their taxes. The TaxToken team has had the unfortunate experience of seeing predatory accounting companies separate disadvantaged Americans from their hard earned dollars. We want to make a change. Every year, our team will work with low income Americans, helping them save money and lead more financially fulfilling lives.


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TOKEN DEPLOYMENT & PLANThe remaining 10% of tokens will be used to further our interests in developing strategic partnerships. TaxToken would like to pair with companies such as Mastercard, TenX, or Visa. Partnering and encouraging participation in our ecosystem with such companies would bring a tremendous amount of value to tokenholders.

Business development - 9%

3% - Research and development

1% - Auditing procedures and Substantive Analytics

5% - Product Analysis and Value Chain Development

Founders, Employees, and Early Participants - 20%

10% - Will be reserved as an asset with a vesting period over distributed evenly over 12 months to bring value to early participants.

10% - Will be used by TaxToken to incentivize founders, employees and the development team. Each TaxToken founder and employee will receive part of their compensation package in TAX tokens, which will vest over 4 years.


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TOKEN ECOSYSTEMIf an individual wanted to see a movie, he or she would most likely would purchase a ticket using fiat currency. Once the ticket is purchased, admission is granted. Our software uses our tokens (TAX) in a similar way. For customers to use our product, they will pay with TAX. In the most basic of scenarios, we are the primary suppliers of TAX which will be distributed through exchange(s). Users can buy TAX from an exchange using several of the major currencies and then use TAX for access to our products.

TAX tokens can also serve a secondary function. Third parties will be able to exchange TAX to purchase data from us. NOTE: WE WILL NEVER SELL DATA THAT CONTAINS IDENTIFIABLE INFORMATION. TaxToken will NEVER store names, SSNs, addresses, or other private information. In fact, we will never have access to that information to begin with. The data available for sale simply correlates aggregate demographics with spending habits, with NO individual identifying information. Furthermore, TaxToken will ask our users if they would like to share their demographic information or spending habits. If users choose to share their data, we offer a discount on our financial services. For users below or near the poverty line, we can use their information to offset the expenses of running a free client.


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TOKEN ECOSYSTEMBlockchain technology has opened up an incredible opportunity to empower individuals. TaxToken intends on leading by example, and asking for permission to sell your data is just one manifestation of that desire. For too long, individuals have had their data sold to the highest bidder, with no say in the matter and no compensation. TaxToken wants to make things right. By being completely transparent and giving users a reward for their data, TaxToken helps put power back in an individual’s hands.

How do we acquire data?Let’s say a client is using our capital gains and losses tracker. When the user provides TaxToken with a wallet address, we scan the blockchain and locate all transactions associated with the provided wallet. However, simply scanning the blockchain does not provide enough information to calculate capital gains and losses. For example, a user buys Bitcoin with US dollars on an exchange. Scanning the blockchain only reveals the amount of Bitcoin going to and from your account. We do not know what the Bitcoin is being used for; therefore, we do not yet know if a taxable event has been triggered. To answer this question, TaxToken integrates with the exchange and reads the relevant API (Application Program Interface). This API provides additional information which, when cross-referenced with blockchain transactions, allows TaxToken to calculate your capital gains or losses.

To complicate matters further, some exchanges will not have the transaction integrated through the blockchain and will instead opt for internal ledgers. As a result of this method, TaxToken will also integrate with exchanges.

Exchange SecurityIs it secure for TaxToken to have access to users’ exchange accounts? The answer is yes. Exchanges like Coinbase that offer access to proxy users via Oauth (open authorization) 2.0 allow us to singularly request “read-only” access, so viewers are not permissioned to do anything to compromise the individual’s account. You can read more about Oauth 2.0 here: https://oauth.net/articles/authentication/. For other exchanges, TaxToken will have to use whatever custom processes the exchange has in place for giving read-only access (oftentimes in the form of the end user having to create keys). TaxToken is currently working with exchanges in order to create a more efficient and streamlined process for acquiring custom access privileges.


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TOKEN ECOSYSTEMWith the emergence of Smart Cards (credit cards with blockchain integration), we will be able to apply a similar authentication process as mentioned above. Using cross validation, TaxToken can acquire more detailed information, allowing TaxToken to correctly itemize deductions.

Blockchain to Blockchain TransactionsWhat happens to transactions that occur entirely on the blockchain? Take for example, an individual sending money to his friend on the ethereum blockchain. This transaction would occur between only two individuals’ wallets.

This wallet to wallet transaction is currently uninterpretable to third parties (such as TaxToken). With no understanding of the nature of the transaction, the information is indistinguishable for tax purposes. As a result, input by the user or a third party is required.

TaxToken intends to automate as much of the tax process as possible. However, some transactions necessitate manual entry. To keep our software as streamlined as possible, emphasis will be placed on a clean User Interface. Users will check a box detailing what type of transaction has occurred. As our machine learning algorithm interprets patterns, users will simply verify suggestions, simplifying manual entry.

Viewing Transactions on the BlockchainFor non-opaque blockchains, all transactions are visible to everyone. Bitcoin is an example of such a blockchain. If one desired to view it, the very first transaction to have ever occurred on the Bitcoin blockchain could be viewed.

When a user provides TaxToken with an address, all transactions from that address can be viewed on the blockchain. The initial lookup may take some time, but all subsequent lookup attempts will be processed faster. A personal subset of the blockchain is created after the initial address is provided to quicken future lookups. After this subset is made, our software continually scans the blockchain to stay up to date with your transaction history. Relevant transactions are added to our previously created subset.


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TOKEN ECOSYSTEMCan everyone see my transaction history?If your transactions occurred on a public blockchain, such as Bitcoin, the answer is yes. Any individual with knowledge of your address can view received and sent transactions from that address.

If your transaction occurred on a opaque blockchain, such as the blockchain Mastercard is developing for smart cards, the answer is no. In opaque blockchains, only the user and Mastercard can see address information. Third parties, such as TaxToken or others, cannot view the transaction without first asking permission.

What does TaxToken’s technology stack look like?

The backend is written in Java using the powerful spring framework and Thymeleaf template engine. The frontend uses JavaScript with common libraries such as jQuery and bootstrap. We use the JPA interface for our data models and database connections. Data is stored in a PostgreSQL relational database. Our infrastructure is established on both Site Ground and Amazon Web Services with autoscaling enabled to handle spikes in traffic. All TaxToken software has been developed with scalability in mind.


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THE TAXTOKEN PROMISEIt is TaxToken’s belief that the inherent integrity of the blockchain will help transform how business is done. Blockchain technology has ushered in a new demand for increased transparency and honesty. As these new standards become the norm, TaxToken hopes for a shift in corporate responsibility and ethical business practices. We want to do our part too.

At TaxToken, we believe in corporate responsibility, blockchain technology, and giving back. The TaxToken promise is to donate 5% of all ICO revenue to outstanding non-profits. Furthermore, the TaxToken team has seen firsthand how access to better accounting methods has positively changed and impacted lives. TaxToken will have a dedicated team committed to public outreach and helping the disadvantaged.


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ROADMAP


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THE TAXTOKEN TEAMFOUNDERS

ADVISORY BOARD

NATHAN NICHOLSCo-Founder & CEO

MICHAEL FOLANDCo-Founder & CCO GAURAV KALE

Co-Founder & CTO

David ByrdEY’s Blockchain Assurance Research Lead in the Americas

Patrick Taylor McQuownFounder/CEO of two Mobile companies with successful exits - raised $50 millionFormer Ivy League professor

Irana ScottCPA, PhD in AccountingCEO/Owner of individual tax practice for over 20 years

Maurice PirioPartner with Perkins Coie Patent PracticeOver 20 years of legal experience and 10 years of technical experienceFocus on blockchain and machine learning technologies

Mark Gregory NelsonAdvisor to companies like Google, Sony Computer Entertainment, Clorox, Bank of America, Cisco Systems, Trinchero Family Estates, Redwood Credit Union, and othersFormer President and COO of Nelson Family of Companies - grew revenue from $56 million to $400 million

Documents

WHITE PAPER 2 - taxtoken.io · TAXTOKEN WHITE PAPER 2.0. WHA AXTOKEN ... Why an Initial Token Sale? Ensuring ... to every receipt throughout the year is simply not feasible for the