The United States Internal Revenue Service (IRS) is facing an appeals case filed by a Tennessee couple who argued that their taxes should not be based on earnings from staking tokens. The couple received a refund check from the IRS in 2021 after filing a lawsuit claiming that the IRS had no right to tax income or profit from staked Tezos (XTZ), as the tokens were "created" and not sold.

The Jarretts filed an appeal in November 2022 to obtain a ruling that would protect them from similar actions by the IRS in filing future returns. The first oral arguments were heard on July 26, with Chief Judge Jeffrey Sutton suggesting that the IRS may have issued the refund as a way of "picking off taxpayers with very good lawyers."