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:
Specifically, the IRS summons seeks information about customers of SFOX, a cryptocurrency prime broker, who used banking services that M.Y. Safra Bank offered to SFOX customers engaged in cryptocurrency transactions.
SFOX is a cryptocurrency dealer and trading platform with over 175,000 registered users who have collectively transacted cryptocurrencies worth more than $12 billion since 2015, the DOJ described.
IRS investigations have identified at least 10 U.S. taxpayers who conducted crypto transactions on the SFOX platform but failed to report those transactions to the IRS as required by law. The tax authority explained that a John Doe summons is a summons that does not identify the person with respect to whose liability the summons is issued.
Taxpayers are required to report any profits and losses related to cryptocurrency transactions on their tax returns. 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? Let us know in the comments section below.
Image Credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.