Reuters: U.S. court allows IRS to seek identities of taxpayers who used cryptocurrencies

According to Reuters, a U.S. federal court has authorized the Internal Revenue Service (IRS) to issue a John Doe subpoena to crypto exchange Kraken to seek the identities of U.S. taxpayers who use cryptocurrencies.

As previously reported by Bitpush, the U.S. Internal Revenue Service filed a petition with the U.S. District Court for the Northern District of California in April to obtain the judge's approval of the John Doe subpoena, seeking to obtain customer records with cryptocurrency transactions of at least $20,000 between 2016 and 2020.

The IRS is also seeking access to Circle’s customer records to check whether U.S. residents are meeting their tax obligations.

A John Doe subpoena does not name the person under investigation and authorizes the IRS to request information about taxpayers who have not yet been identified. It allows the IRS to obtain names and information about taxpayers who belong to a certain group, such as a list of investors who may have violated tax laws.

“The John Doe subpoena is intended to allow the IRS to uncover those who fail to properly report their virtual currency transactions,” IRS Commissioner Chuck Rettig said in a statement.

The IRS took similar action against Coinbase in 2016, leading to a year-long court battle that culminated in the exchange turning over thousands of customer records.

“Those who conduct transactions using cryptocurrencies must comply with their tax obligations like any other taxpayer,” David Hubbert, acting attorney general for the Justice Department’s tax division, said in a statement.