Tax

Crypto Exchange Kraken Ordered to Provide User Records to IRS

“Those who transact with cryptocurrency must meet their tax obligations like any other taxpayer.”

The U.S.-based crypto exchange Kraken will now be obliged to provide the Internal Revenue Service (IRS) with details about its users engaged in cryptocurrency transactions equivalent to $20,000.

What Happened: A court order ruled that the IRS was authorized to serve a John Doe Summons on Kraken, seeking information about users engaged in crypto transactions in any year between 2016 and 2020.

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“Those who transact with cryptocurrency must meet their tax obligations like any other taxpayer,” said Acting Assistant Attorney General David A. Hubbert of the Justice Department’s Tax Division.

IRS Commissioner Chuck Rettig also weighed in, saying, “There is no excuse for taxpayers continuing to fail to report the income earned and taxes due from virtual currency transactions.”

Rettig explained that this John Doe summons is part of the IRS’s efforts to uncover those who skirt reporting the entirety of their taxable income.

Why It Matters: A John Doe Summons is used by the IRS to get the names and information about all taxpayers from a specified description — in this case, that transacted for over $20,000.

Kraken isn’t the only crypto company to be subject to an order of this nature.

Coinbase Global was first served with a John Doe Summons in 2016, which led to the IRS obtaining information of 13,000 Coinbase users.

Earlier this year, the IRS announced a special task force to identify hidden cryptocurrency transactions. The IRS called the new action “operation hidden treasure” and said that they had employed agents trained in cryptocurrency and virtual currency tracking to unearth tax evasion.

This story originally appeared on Benzinga. © 2021 Benzinga.com.

Benzinga does not provide investment advice. All rights reserved.

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