The United States Internal Revenue Service (IRS) has been demanding customer information from cryptocurrency exchanges as it goes after traders and investors who 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 US IRS the approval to obtain the identities of customers who have traded cryptocurrencies on the Kraken exchange. 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. 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 transact with cryptocurrencies have to 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 or class or people that might have failed to comply with the internal revenue laws. Hence, the IRS requests that the cryptocurrency exchange provides documents and transaction records that can be used to know the tax-paying individuals on the platform.
IRS Commissioner Chuck Rettig said there isn’t any excuse for taxpayers failing to report income earned and taxes due from cryptocurrency transactions. This John Die summons is part of the agency’s effort to uncover those who avoid reporting and paying their fair share.
IRS cracking down on crypto-traders
The IRS has increased its efforts in identifying cryptocurrency traders and investors who refused to report their earnings. The tax agency recently received customer information from Circle. It has also encouraged the US Congress to set cryptocurrency reporting standards as 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, making it hard for people to evade their taxes.