US Court Allows IRS ‘John Doe’ Summons on California Crypto Broker

US Court Allows IRS ‘John Doe’ Summons on California Crypto Broker

A federal judge in California has allowed the Internal Revenue Service to issue ‘John Doe’ summonses on crypto broker SFOX Inc and its affiliates.

The IRS is specifically seeking information on US taxpayers who did at least the equivalent of $20,000 in crypto transactions and failed to report it between the years 2016 and 2020.

The records the IRS is seeking are for Americans who did business with or through SFOX Inc, a San Francisco, California-based digital currency dealer, and did not report the funds on their tax returns.

“The information requested by the subpoena approved today will help ensure that cryptocurrency owners comply with tax laws,” said Deputy Attorney General David A. Hubbert of the Justice Department’s Tax Division.

IRS looks for tax cheats

The subpoenas to be issued come at a time when the IRS is considering new tax filing requirements and working to crack down on delinquents. The John Doe subpoena, authorized by the US Supreme Court in 1975 in United States v. Bisceglia and later codified by Congress, has long been a powerful tool used by the IRS to combat tax fraud schemes and will acquire extensive information on cryptocurrency transactions.

“The John Doe subpoena continues to be a very valuable enforcement tool that the US government will use time and time again to detect tax fraud, and this is yet another example of that,” said IRS Commissioner Chuck Rettig. . “I urge all taxpayers to meet their filing and reporting responsibilities and avoid engaging in schemes that may ultimately prove detrimental to them.”

Similar subpoenas issued to Coinbase and Mastercard

According to the statement, cryptocurrencies are reported to be difficult to trace and inherently pseudo-anonymous in appearance, taxpayers may be using them to hide taxable income from the IRS. Will investigate people who have not complied with US tax laws.

In the past, the IRS used John Doe summonses to identify people who failed to pay their tax obligations by servicing credit card companies like Mastercard and Visa. He has also obtained information on cryptocurrency exchanges such as Coinbase.

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