The United States Internal Revenue Service (IRS) has been demanding customer information from cryptocurrency exchanges as it goes after traders and investors who have refused to report their crypto earnings in recent years. The court has now ordered Kraken to submit customer data to the IRS.
Kraken to submit customer data to the IRS
A US federal court in the Northern District of California has granted the IRS permission to obtain the identities of customers who have traded cryptocurrencies on the Kraken exchange. In fact, this comes after the agency obtained similar information from Circle.
“A federal court in the Northern District of California entered an order today authorizing the IRS to serve a John Doe summons on Payward Ventures Inc., and Subsidiaries d/b/a Kraken (Kraken) seeking information about US taxpayers who conducted at least the equivalent of $20,000 in transactions in cryptocurrency during the years 2016 to 2020,” the order reads.
Effectively, the tax agency is seeking the records of US citizens who traded with or via Kraken in the past few years. Acting Assistant Attorney General David A. Hubbert of the Justice Department’s Tax Division stated that the approval is crucial to ensuring that crypto owners follow the tax laws. He added that those who use cryptocurrencies must meet their tax obligations like any other taxpayer.
In its announcement, the DOJ said that the court order doesn’t allege that Kraken has done anything wrong. Instead, the tax agency’s investigations are focused on a group of people that may have failed to comply with the internal revenue laws. Hence, the IRS requests that the cryptocurrency exchange provide documents and transaction records. These records will be used to put a name to tax-paying individuals using the platform.
IRS Commissioner Chuck Rettig said there is no excuse for taxpayers who fail to report income earned from cryptocurrency transactions. Clearly, the John Doe summons is part of the agency’s broader effort to uncover those who avoid reporting and paying their fair share of taxes.
IRS cracking down on crypto-traders
The IRS has increased its efforts in identifying cryptocurrency traders and investors who refused to report their earnings. As an example, the tax agency recently received customer information from peer-to-peer payments technology company, Circle. Additionally, it has encouraged the US Congress to set cryptocurrency reporting standards. In fact, this would make it easier for people to disclose their crypto earnings.
Furthermore, the IRS is planning to use artificial intelligence (AI) to trace cryptocurrency transactions. Clearly, this will make it harder for people to evade their taxes.