One of the most powerful tools in the Internal Revenue Service arsenal is the John Doe summons. However, as we all learned from Spider-Man, with great power comes great responsibility.
Although it ultimately approved an IRS request to serve a summons for information on the popular cryptocurrency exchange Kraken Inc., the U.S. District Court for
The IRS has several tools in its arsenal to encourage compliance and audit and enforce those it believes are failing to comply. One of the most powerful tools is the John Doe summons. A regular IRS summons seeks information on a specific taxpayer. However, a John Doe summons, as the name implies, involves a group of taxpayers that the IRS cannot identify by name – yet. Judicial approval is required, but the approval is ex parte (i.e. opposing parties are not notified or can respond before the court rules). The IRS has used this tool to find tax shelter participants by summonsing the promoters, and most famously foreign banks like UBS, for foreign bank account holders. The next target, cryptocurrency investors.
The IRS already successfully received thousands of names of account holders from the Coinbase cryptocurrency exchange. Many taxpayers, who received letters from Coinbase about the disclosure, came forward and disclosed assets in their accounts.
The IRS has now secured permission to issue a John Doe summons for cryptocurrency records on payments using a technology company called Circle and another popular cryptocurrency exchange – Kraken. This is all part of what the IRS has called, in public speeches, a “treasure hunt” for unreported cryptocurrency. If you have unreported cryptocurrency transactions, here’s what you should know.
Continue Reading The IRS is Hunting for Cryptocurrency Investors with John Doe Summonses
Cryptocurrency is more accessible than ever before. Banks are continuing to both implement procedures for and, in some cases, develop their own cryptocurrencies. Paypal allows users in the U.S. to buy, sell and hold select cryptocurrencies directly through PayPal and it will enable cryptocurrency as a funding source for purchases in 2021. Volatility in the price of cryptocurrencies continues, and is likely to continue, but it is becoming a more recognized investment and method of payment. As more taxpayers integrate cryptocurrency into their finances, they should consider tax implications. Here are some things to remember about current or future cryptocurrency transactions and investment.
Continue Reading Taxpayer Guidelines for Cryptocurrency in 2021
The IRS just published Notice 2014-21 which explains the IRS’ vision on how general tax principals apply to “virtual currency” transactions like Bitcoin.
If you’re not familiar with Bitcoin, it’s a currency that isn’t issued by a central government. And just to be clear, there isn’t an actual “coin” associated with it either. The currency