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U.S. Taxman Can Seek Details on User Transactions from Kraken, Court Rules

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Published on:
May 6, 2021

“Those who transact with cryptocurrency must meet their tax obligations like any other taxpayer,” the Justice Department says.

U.S. Taxman Can Seek Details on User Transactions from Kraken, Court Rules

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A U.S. court has given the Internal Revenue Service permission to seek information about American taxpayers who have used the Kraken crypto exchange.

 

According to the Department of Justice, the IRS specifically wants to learn the identities of people who have completed at least $20,000 in crypto transactions from 2016 to 2020.

 

Known as a “John Doe summons,” the move aims to uncover people who may be trying to avoid paying their fair share of taxes.

 

The IRS is one of a number of tax agencies concerned that cryptocurrencies could be used to obfuscate earnings and sidestep hefty bills — and questions about ownership of such assets now appear more prominently on tax forms.

 

In most countries, some form of capital gains tax must be paid when the likes of Bitcoin and Ether are sold for a profit.

 

It’s important to stress that this action doesn’t suggest Kraken has done anything wrong.

 

‘An Important Step’ 

IRS Commissioner Chuck Rettig said the court’s approval was a significant step forward, adding:

“There is no excuse for taxpayers continuing to fail to report the income earned and taxes due from virtual currency transactions.”

Meanwhile, David A. Hubbert of the Justice Department’s tax division warned:

“Those who transact with cryptocurrency must meet their tax obligations like any other taxpayer.”

As reported by CoinMarketCap Alexandria last month, Britons suspected of tax evasion and avoidance will be ordered to share data on their cryptocurrency holdings.

 

A new handbook published by Her Majesty’s Revenue and Customs warns “a defense of ignorance of the law” is no longer going to be accepted” — not least because digital assets have now existed for a number of years.

Author(s)

Connor Sephton

I cover the crazy world of crypto.

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