The Internal Revenue Service (IRS) has obtained a “court order authorizing summons for records relating to U.S. taxpayers who failed to report and pay taxes on cryptocurrency transactions.” The IRS commissioner commented: “The government’s ability to obtain third-party information on those failing to report their gains from digital assets remains a critical tool in catching tax cheats.”
IRS Seeks Crypto Investors’ Records From Bank
The U.S. Department of Justice (DOJ) announced Thursday that the Internal Revenue Service (IRS) has obtained a “court order authorizing summons for records relating to U.S. taxpayers who failed to report and pay taxes on cryptocurrency transactions.”
U.S. District Judge Paul G. Gardephe entered an order on Sept. 22 “authorizing the IRS to issue a so-called John Doe summons requiring M.Y. Safra Bank to produce information about U.S. taxpayers who may have failed to report to the IRS, and pay taxes on, cryptocurrency transactions,” the DOJ detailed, noting:
The IRS summons is specifically seeking information on customers of SFOX (a crypto prime broker) who used M.Y. banking services. Safra Bank offered cryptocurrency transactions to SFOX clients.
SFOX, a crypto trading and dealer platform that has over 175,000 users who collectively have transacted more than $12 Billion in cryptocurrencies since 2015 according to the DOJ.
IRS investigations found at most 10 U.S. taxpayers that conducted crypto transactions via the SFOX exchange platform and failed to notify the IRS of those transactions as required by law. A John Doe summons, according to the tax authority, is not a summons that names the individual with regard to whom the summons was issued.
All profits or losses arising from cryptocurrency transactions must be reported by taxpayers on their taxes. However, the IRS said that its “experience has demonstrated significant tax compliance deficiencies relating to cryptocurrencies and other digital assets.”
IRS Commissioner Charles P. Rettig stressed:
The government’s ability to obtain third-party information on those failing to report their gains from digital assets remains a critical tool in catching tax cheats.
U.S. Attorney Damian Williams opined: “The government is committed to using all of the tools at its disposal, including John Doe summonses, to identify taxpayers who have understated their tax liabilities by not reporting cryptocurrency transactions, and to make sure that everyone pays their fair share.”
What do you think about the IRS issuing a John Doe summons for crypto investors’ records? Please comment below.
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