A federal court in the Central District of California has authorized the Internal Revenue Services (IRS) to serve a John Doe summons on crypto prime dealer SFOX.
This allows the agency to catch potential tax evaders who are using the company’s services, since crypto transactions are taxed like property and the IRS collects capital gains tax on every transaction.
“Taxpayers who transact with cryptocurrency should understand that income and gains from cryptocurrency transactions are taxable,” said Deputy Assistant Attorney General David A. Hubbert of the Justice Department’s Tax Division.
The court order was approved by Judge Otis D. Wright and authorizes the IRS to seek information about taxpayers who have conducted at least the equivalent of $20,000 in transactions in crypto between 2016 and 2021 with or through SFOX.
SFOX will be required to share any records identifying users evading taxes and their transactions through the service.
IRS Commissioner Chuck Rettig said, “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.”
SFOX itself is not accused of violating any laws in connection with its digital currency business.
