The U.S. Internal Revenue Service (IRS) has been granted the authority to issue a “John Doe” summons to New York-based M.Y. Safra Bank. The summons forces the bank to hand over information about its customers who have failed to declare and pay taxes on cryptocurrency transactions conducted over crypto exchange SFOX.
On Thursday it was announced by U.S. Attorney Damian Williams, Deputy Assistant Attorney General David Hubbert, and IRA Commissioner Charles Rettig that U.S. Judge Paul Gardephe authorized the IRS to issue John Doe summons on New York-based M.Y. Safra Bank. This is a term used when the IRS investigates unknown taxpayers. The summons orders the bank to submit information regarding customers that may have failed to report and pay taxes on their cryptocurrency transactions. To support the summons, the IRS is claiming that holders of cryptocurrencies often fail to report their tax returns on any profit made from crypto.
The IRS is looking specifically at users of the prime dealer SFOX. Williams said in a statement:
Taxpayers who transact with cryptocurrency should understand that income and gains from cryptocurrency transactions are taxable. Adding that information sought by the summons “will help to ensure that cryptocurrency owners are following tax laws.”
Since 2015, SFOX’s 175,000 registered users have collectively completed over $12 billion in crypto transactions. The firm connects crypto exchanges, over-the-counter virtual currency brokers, and liquidity providers. IRS Commissioner Charles Rettig said:
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.
He added that authorisation of the summons “reinforces our ongoing, significant efforts to ensure that everyone pays their fair share.” He added:
Taxpayers earning income from digital asset transactions need to come into compliance with their filing and reporting responsibilities.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
Source: Crypto Daily