The U.S. Internal Revenue Services, the country’s main body responsible for collecting taxes and administering the Internal Revenue Code, will probe users of crypto exchange Kraken after a court order, news outlet Reuters said this morning.
The taxman comes for crypto: DOJ says a federal court has authorized the IRS to serve a John Doe summons on the crypto exchange Kraken, seeking information about U.S. taxpayers who conducted at least $20,000 of transactions in cryptocurrency from 2016 to 2020.
— Eamon Javers (@EamonJavers) May 5, 2021
The IRS is seeking information about taxpayers who conducted at least $20,000 worth of transactions in cryptocurrency from 2016 to 2020, the Department of Justice said in a statement. A federal court passed the order on Wednesday.
“Those who transact with cryptocurrency must meet their tax obligations like any other taxpayer”, acting Assistant Attorney General David Hubbert of the Justice Department’s Tax Division said in the statement.
Kraken slapped by John Doe
The so-called “John Doe Summons” has been imposed and would seek identities of U.S. taxpayers who have used cryptocurrencies on Kraken. The exchange is one of the largest in the country and processes over $4 billion worth of crypto trades daily.
The summons is used by the IRS to obtain personal information about all taxpayers from a specified description, which in this case, means all those who traded over $20,000 worth of cryptocurrency on Kraken.
Users – Rekt 🐸
“A federal court in the Northern District of California entered an order today authorizing the IRS to…”
— Julien Bouteloup (@bneiluj) May 6, 2021
As such, Kraken’s not the only crypto business to have received such an order. Back in 2016, fellow US exchange Coinbase was served with a John Doe Summons — with the IRS obtaining information of 13,000 Coinbase users.
In another recent incident, crypto exchange Circle was targeted by the IRS to identify the U.S. taxpayers who transferred $20,000 or more via transactions that involved cryptocurrencies between 2016 and 2020.
“Tools like the John Doe summons authorized today send the clear message to U.S. taxpayers that the IRS is working to ensure that they are fully compliant in their use of virtual currency,” said IRS Commissioner Chuck Rettig at the time.
Hard on crypto
Meanwhile, the moves come on the back of the IRS announcing a special task force to identify hidden cryptocurrency transactions earlier last year in a special project called “Operation Hidden Treasure.”
As per earlier reports, the IRS claims to have employed individuals trained in blockchain analytics and identifying crypto transactions to determine whether a certain address has engaged in tax evasion or not. Talk about decentralization.
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