Going to be taxed? IRS Authorized to Request Kraken’s User Transaction Records

U.S. Court Authorizes IRS to Obtain Information on Taxpayers Who Use Cryptocurrencies

Going to be taxed? IRS Authorized to Request Kraken's User Transaction Records

It is well known that because cryptocurrency transactions are difficult to track and anonymous, taxpayers may use them to hide taxable income.

Now the Internal Revenue Service (IRS) may be ready to tax cryptocurrency transactions. The Internal Revenue Service (IRS) is seeking access to records of U.S. taxpayers’ transactions on digital currency exchanges.

A federal court in the Northern District of California issued an order on May 5 authorizing the IRS to issue John Doe subpoenas to Payward Ventures Inc. and its cryptocurrency exchange, Kraken, to produce records of users who traded more than $20,000 in cryptocurrency with Kraken between 2016 and 2020 in order to identify U.S. taxpayers who “may not be in compliance with domestic tax laws.”

A “John Doe summons” is also known as an anonymous summons, which is issued under the name of John Doe when the defendant’s real name is not known at the time of service, and may be corrected if the defendant’s real name is clarified after service.

The John Doe summons issued by the Internal Revenue Service (IRS) seeks information about a taxpayer whose name is unknown but who has a potential tax liability.

“Collecting the information in the subpoenas approved today is an important step in ensuring that cryptocurrency owners comply with the tax laws,” said General David A. Hubbert, acting assistant attorney general for the U.S. Department of Justice’s Tax Division, adding that “those who use cryptocurrencies to conduct transactions must meet their tax obligations just like any other taxpayer.”

IRS Commissioner Chuck Rettig said, “There is no excuse for taxpayers to continue not reporting income and taxes due from virtual currency transactions.” “This John Doe summons is part of our effort to identify those who are trying to avoid reporting and avoid paying a reasonable amount of tax.”

The order follows an April 1, 2021, Massachusetts federal court order authorizing the IRS to require similar services for John Doe subpoenas on Boston-based digital currency exchange Circle.

This California order does not charge Kraken with engaging in any wrongdoing in connection with its digital currency exchange business. Instead, according to the court’s order, the subpoena seeks information regarding the IRS’s “investigation of an identifiable group or class of persons” that the IRS has a reasonable basis to believe “may have failed to comply with the Internal Revenue Code. According to a copy of the subpoena filed, the IRS directed Kraken to produce transaction records and other documents relevant to identifying the conduct of the U.S. taxpayers described above.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/going-to-be-taxed-irs-authorized-to-request-krakens-user-transaction-records/
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