A California federal judge allowed the Internal Revenue Service to issue ‘John Doe’ summons on the SFOX Inc crypto broker and its affiliates.
The IRS is says its seeking information about U.S. taxpayers who conducted at least the equivalent of $20,000 in crypto transactions and didn’t report the funds between the years 2016 and 2020.
The records that the IRS is seeking are for Americans who engaged in business with or through SFOX Inc, a digital currency dealer headquartered in San Francisco, California, and didn’t declare the funds in their tax filings.
“The information sought by the summons approved today will help to ensure that cryptocurrency owners are following the tax laws,” said Deputy Assistant Attorney General David A. Hubbert of the Justice Department’s Tax Division.
IRS seeking tax cheats
The summonses to be issued come at a time when IRS is implementing new tax reporting requirements to crack down on tax defaulters. The John Doe summons, that were allowed by the U.S. Supreme Court in 1975 and signed off by Congress, are a great tool for IRS to block tax fraud
“The John Doe summons remains a highly valuable enforcement tool that the U.S. government will use again and again to catch tax cheats, and this is yet one more example of that,” said IRS Commissioner Chuck Rettig.
“I urge all taxpayers to come into compliance with their filing and reporting responsibilities and avoid compromising themselves in schemes that may ultimately go badly for them.” she added in a statement.
Similar summons issued to Coinbase and Mastercard
According to the statement, cryptocurrencies are reported to be difficult to trace and have an inherently pseudo-anonymous aspect, taxpayers may be using them to hide taxable income from the IRS. It will investigate individuals who have failed to comply with U.S. tax laws.
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