The U.S Department of Justice (DOJ) is working with federal tax collectors to find crypto traders who didn’t pay their government dues.
In a statement, the Justice Department says that a California court has issued an order for the Internal Revenue Service (IRS) to serve a John Doe summons directing crypto prime dealer SFOX to produce transaction records and related documents of a particular group of taxpayers who have used its services.
SFOX is not facing allegations of wrongdoing in its business operations, but the summons will serve as a means to obtain information about tax law violations committed by individuals whose identities are unknown.
In a memo issuing the summons, deputy assistant attorney general David A. Hubbert of the Justice Department’s Tax Division says that an IRS agent has identified SFOX customers who may have failed to comply with tax reporting requirements.
“The IRS expects that in response to the John Doe summons, SFOX will be able to provide information about the identities and cryptocurrency transactions of SFOX users, which the IRS will then be able to use in conjunction with other publicly available information to examine whether these users have complied with the internal revenue laws.”
Otis D. Wright, a federal judge for the United States District Court for the Central District of California, found a reasonable basis to believe that individuals with at least $20,000 worth of digital asset transactions may have failed to comply with federal tax laws.
The summons aim to gather information about SFOX customers with at least $20,000 in crypto transactions from 2016 to 2021.
IRS commissioner Chuck Rettig says the government will continue using John Doe summons to catch tax evaders as he warns those who cheat on their filings.
“I urge all taxpayers to come into compliance with their filing and reporting responsibilities and avoid compromising themselves in schemes that may ultimately go badly for them.”
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