As we build the new V3 Storj network, we have to address many massive innovation challenges, some of which have never had to be addressed before. These obstacles go beyond the technology our engineering team is building and include us balancing all the uncertainty of emerging regulatory hurdles and challenges across various jurisdictions (particularly tax jurisdictions) all over the world.
Rules for US-Based Storage Node Operators Earning over $600 in a Calendar Year
We want to be transparent regarding one particular challenge with paying a small number of our unverified, US-based storage node operators. There is a rule in the United States regarding information reporting to the Internal Revenue Service on Form 1099. The rule requires us to gather information on vendors (which node operators could be considered) that receive more than $600 in a one-year period.
If you are a node operator outside of the United States, and your IP address is not connected to the United States, you will not be required to provide any information that will be shared for Form 1099 purposes. If you are a storage node operator in the United States and you earn less than $600 in STORJ in a calendar year, you will not be required to share any information.
The information we are required to gather is very simple and we are building it into our workflow for storage node operator sign-ups, but the concept might be new to some of our community members outside the United States. US-based node operators will have to comply with our information requests before we are able to send payments in excess of $600 in the year. We expect this will impact a small percentage of our storage node operators.
Does This Apply to Me?
In preparing for our V3 release, we have outlined a simple process to make compliance with this rule as simple as possible to our node operators.
We’ll be publishing a blog post on the economics of operating a storage node, and a calculator to help estimate potential earnings, in the coming weeks. We’ll explore the economics of operating a storage node, looking at how much nodes can earn given the characteristics of the node and network environment within a given set of assumptions about the level of use and the types of use on the network. That will also help you understand whether this rule is likely to apply to you. Again, this will only impact storage node operators within the larger US.
Our hope is that Storj and our storage node operators will be seen as a community doing the right thing (even when administratively painful at times) while working towards innovation and hoping the regulators catch up soon. We thank you, the community, for understanding.