The US government agency seeks the payment of taxes and the identity of cryptocurrency users. A direct order from the Boston Federal Court had also mentioned Kraken as a subsidiary of Circle.
Kraken must now provide its customers’ data to the US Internal Revenue Service (IRS). That is because of an order that a federal court in the Northern District of California recently issued.
Under the order, the IRS will be able to issue a “John Doe subpoena” to request the identity of taxpayers that have used the exchange. The US tax service seeks data of taxpayers who have moved at least USD 20,000 worth of cryptocurrencies between 2016 and 2020.
The Californian court made this decision as it is concerned that US citizens may not pay taxes for their activities associated with cryptocurrencies.
IRS Commissioner Chuck Rettig stated that “taxpayers have no excuse not to report the income that they earn and the taxes that they owe for trading virtual currencies.” He considers that this approach is a step forward to “discovering those who are trying to evade the reports and avoid paying their fair share.”
The ruling in question is “an important step in ensuring that cryptocurrency owners comply with tax laws,” according to David A. Hubbert. The Acting Deputy Attorney General of the Department of Justice (DoJ) said that “those who trade cryptocurrencies must comply with their tax obligations.”
The document indicates that this order does not contemplate accusations against Kraken for any non-compliance or “irregularities” with its activities.
The IRS says that the subpoena seeks to access data of specific customers. According to the document, the government agency is conducting an investigation and they believe that there are people who “may have breached internal revenue laws.”
The IRS Launches a Crusade to Collect Taxes from Cryptocurrency Users
The new IRS order seeks to identify cryptocurrency users and charge them taxes for their activities with those assets. Between 2016 and 2020, the latter traded more than USD 20,000 worth of cryptocurrencies on exchange Circle and its subsidiaries.
The US Department of Justice explains that the objective is to identify investors who have traded cryptocurrencies without reporting them. In this way, they plan to collect the corresponding taxes, according to IRS regulations.
Last month, a federal court in Boston, Massachusetts, issued a similar ruling for Circle, the Boston-based operator of Kraken. This order covered the exchange as a subsidiary of Circle, but the new ruling is aimed directly at the San Francisco-based company.
The US tax agency has taken these actions to end anonymous transactions with Bitcoin and other cryptocurrencies. Its main intention is to have access to customers’ hardware wallets.
At the end of April, the IRS presented its plans to develop a series of tools to hack private keys to these wallets. With this, the agency sought to have access to the funds that they store and avoid tax evasion.
By Alexander Salazar
