Win for tax enforcer as California federal court gives it green light to seek information on Kraken exchange cryptocurrency deals.
The U.S District Court for the Northern District of California has given the Internal Revenue Service approval to issue a “John Doe” summons seeking information on customers of San Francisco-based cryptocurrency exchange Kraken.
A John Doe summons does not name the parties under investigation because the identities of those parties are unknown.
Like the Circle Internet Financial Inc. summons authorized on April 1, the Kraken summons applies only to customers engaged in transactions with the company worth a total of $20,000 or more between 2016 and 2020. The court said the summons did not necessarily allege any wrongdoing by Kraken or its customers.
“Gathering the information in the summons approved today is an important step to ensure cryptocurrency owners are following the tax laws. Those who transact with cryptocurrency must meet their tax obligations like any other taxpayer,” said David A. Hubbert, an acting assistant attorney general in the Justice Department’s tax division.
The summons is a stern reminder to digital currency investors that federal tax laws apply to cryptocurrency transactions, and indicates that enforcement agencies are ready to scrutinize any individuals attempting to use the pseudo-anonymous attributes of digital currency to evade U.S. law.
IRS Commissioner Chuck Rettig said, “There is no excuse for taxpayers continuing to fail to report the income earned and taxes due from virtual currency transactions. This John Doe summons is part of our effort to uncover those who are trying to skirt reporting and avoid paying their fair share.”