A court in the Northern District of California introduced an order that authorizes the IRS to serve a John Doe summons on Payward Ventures Inc. and its subsidiaries d/b/a Kraken (Kraken) looking for info about U.S. taxpayers who did transactions in crypto of at least the equivalent of $20,000 during the years 2016-2020. The IRS is looking for the records of America’s netizens who conducted business through or with Kraken, a digital exchanger whose headquarters are situated in San Francisco, California.
Chuck Rettig, IRS Commissioner said that there is no excuse for taxpayers continuing to fail to report the taxes due and income earned from cryptocurrency transactions. He further added that the John Doe summons is part of their effort to reveal those who are trying to avoid paying their fair share and skirt reporting.
David A. Hubbert, Acting Assistant Attorney General, Justice Department’s Tax Division said that collecting info in the summons accepted today is a significant step to ensure crypto owners are abiding by the tax laws. Additionally, he said that those who transact with crypto must meet their tax obligations like any other taxpayers.
As usually defined, cryptocurrency is a digital representation of value. This is because crypto transactions can be difficult to trace and have an inherently pseudo-anonymous aspect. Taxpayers might be using them to hide income that is taxable from the IRS. A federal court in the District of Massachusetts granted an order on 1st April 2021 authorizing the IRS to serve a same John Doe summons on Circle, a digital currency exchange headquartered in Boston.