The U.S. District Court for the Central District of California on August 15 authorized the IRS to serve a John Doe summons on SFOX, a cryptocurrency prime dealer based in Los Angeles, according to a Justice Department news release. The summons seeks information about U.S. taxpayers who conducted at least the equivalent of $20,000 in crypto transactions between 2016 and 2021 with or through SFOX. (DOJ Press Release No. 22-876)
“There is no allegation in this suit that SFOX has engaged in any wrongdoing in connection with its digital currency business,” the department said. Rather, the summons directs the company to produce records identifying U.S. taxpayers who have used its services, along with other documents tied to their cryptocurrency transactions, it added.
According to the Justice Department, the court “found that there is a reasonable basis for believing that individuals conducting at least $20,000 in cryptocurrency transactions may have failed to comply with federal tax laws.”
“Taxpayers who transact with cryptocurrency should understand that income and gains from cryptocurrency transactions are taxable,” said David Hubbert, deputy assistant attorney general in charge of the department’s Tax Division.
“The John Doe summons remains a highly valuable enforcement tool that the U.S. government will use again and again to catch tax cheats and this is yet one more example of that,” IRS Commissioner Chuck Rettig said.
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