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- Through Circle’s Poloniex customer records, the IRS seeks information about the U.S. taxpayers who practiced cryptocurrency transactions worth $20,000 or more between 2016 to 2020.
- The U.S. Judge Richard G. Stearns believes the IRS is justified in suspecting that crypto-users might have escaped their federal tax obligations.
- The IRS Commissioner Chuck Rettig cleared that the regulator isn’t accusing Circle of participation in any wrongdoings.
On Thursday, the Department of Justice (DOJ) announced the Internal Revenue Service’s (IRS) request to acquire the customer records from the crypto firm Circle Internet Financial, to unmask high-value customers and ensure the mentioned U.S. citizens are fulfilling their tax obligations, has been sanctioned.
IRS Developed Authorisation
The DOJ’s official statement allows the U.S. tax collector to serve a “John Doe summons” to Circle and its affiliates. In the quest to gather information about the U.S. taxpayers who, with or through Circle, practiced cryptocurrency transactions worth $20,000 or more in the period of the year 2016 to 2020; the IRS is specifically after the user details of Poloniex, which Circle acquired for $400 million in 2018 and spun out the following year.
“John Doe Summons”
A John Doe summons doesn’t include the names of users being investigated. But if the IRS finds their activities suspicious or sees a reason to suspect that the user might have indulged in tax law violation, they have the authority to list them under a particular group and demand information about the unidentified taxpayers. It just requires the signature of a federal judge.
As mentioned in the DOJ’s statement, a Massachusetts court supports the IRS request; U.S. Judge Richard G. Stearns believes the tax watchdogs are justified in suspecting that crypto-users might have escaped their federal tax obligations and thus authorized the request.
Circle isn’t at Fault
The IRS Commissioner Chuck Rettig made clear in his statement that the institution isn’t accusing Circle of participation in any wrongdoings. The practice is just another step to filter out the U.S. residents who, by failing to report their digital currency transactions, are evading tax laws. They are determined to reinforce the law wherever they find systemic non-compliance or fraud.
IRS Strict Actions to Uncover Tax-Evading Citizens
Back in 2016, the IRS took similar action against Coinbase, which dragged a year-long legal fight between the two institutions. In the end, the exchange complied with the order and divulged nearly 14,000 customer records.
In the past year, the IRS included a separate space at the top of the 1040 form to self-testify whether one has participated in any taxable crypto transactions. And in 2020, it also reminded crypto holders to report their taxable transactions via letters. The tax regulator’s actions send out a clear message to U.S. taxpayers that the IRS won’t back down from hunting and punishing the crypto-tax evaders.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
