IRS Chases Crypto Tax Evaders With Banking Court Order

The IRS has received a court order to collect records from a bank that the agency says will help it identify US taxpayers who have not reported taxable income from crypto transactions.

Uncle Sam said yesterday it specifically takes on the records of New York-based bank MY Safra, which has partnered with SFOX – a prime cryptocurrency broker – to offer the latter’s clients access to cash deposit bank accounts . SFOX users could thus use MY Safra funds to buy and sell digital coins.

The IRS got a similar request against SFOX in August. Both organizations received “John Doe” summonses, a tactic used by the IRS when investigating wrongdoing without knowing the names of accused taxpayers.

Basically, the IRS believes that people have profited from cryptocurrency trading through SFOX and MY Safra, and have not reported that income or paid the required tax on it, and so the agency wants to hunt those people and tie in wallet-dumping ass-kicking machine.

“John Doe’s summons directs MY Safra to produce records that will allow the IRS to identify U.S. taxpayers who were customers of SFOX and who engaged in cryptocurrency transactions that may not have not been properly reported on tax returns,” the agency said.

According to the IRS, its investigation into the world of cryptocurrencies revealed “significant tax compliance deficiencies” across the industry, and that it “has good reason to believe that many transactions in virtual currency are not correctly declared on tax returns”. That said, many people use cryptocurrencies for legitimate purposes and pay income taxes.

According to the IRS statement, SFOX has more than 175,000 registered users who have made more than $12 billion in transactions since 2015. The agency said it has identified “at least ten” — count them, ten — taxpayers Americans who have used SFOX but failed. to report transactions.


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With the data it collects from MY Safra, the IRS said it expects to be able to match SFOX user identities with Safra services “which the IRS can then use in conjunction with other information to examine whether such users have complied with internal revenue laws.”

Damian Williams, U.S. Attorney for the Southern District of New York, where the summons was granted, said cryptocurrency transactions are not tax-exempt. “The government is committed to using all the tools at its disposal…to identify taxpayers who have understated their tax obligations by not reporting cryptocurrency transactions, and to ensure that everyone pays their fair share. “Williams said.

And something else

Meanwhile, the US Commodity Futures Trading Commission has fees filed and paid against blockchain outfit Ooki (formerly known as bZeroX) and its founders.

The company and its pair of traders have been collectively accused of illegal trading in off-exchange assets, operating as unregistered futures traders and failing to adopt a customer identification program as required by law. on bank secrecy.

The CFTC announced its settlement in the case with the filing, stating that the respondents (the company and its two founders) will have to pay a fine of $250,000, along with a promise not to violate the Commodities Exchange Act. and CFTC regulations. ®

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