The Southern District of New York judge authorized the U.S. Internal Revenue Service (IRS) to John Doe summons requiring M.Y. Safra Bank to produce information about U.S. taxpayers who may have “failed to report to the IRS, and pay taxes on, cryptocurrency transactions.”
The IRS is specifically interested in the user records of cryptocurrency prime broker SFOX. New York’s M.Y. Safra bank provided banking services to SFOX customers for cryptocurrency transactions and just last month, IRS served John Doe summons to SFOX.
In 2019, M.Y. Safra Bank and SFOX teamed up to provide SFOX users with access to cash-deposit bank accounts. At least ten SFOX users who violated the law by failing to declare their cryptocurrency transactions have been located by the IRS.
Damian Williams, the U.S. attorney for the Southern District of New York, stated “The government is committed to using all of the tools at its disposal, including John Doe summonses, to identify taxpayers who have understated their tax liabilities by not reporting cryptocurrency transactions, and to make sure that everyone pays their fair share.”
The IRS expects that M.Y. Safra will be able to offer information regarding the identities and crypto transactions of SFOX users that used the bank’s services. The IRS will use the information from M.Y. Safra bank and other sources to evaluate any gaps in tax compliance.
The U.S. Attorney’s office of the Southern District of New York said that the summons to be issued does not equate to any allegations of wrongdoing.
Instead, the summons is a means of uncovering information about unknown taxpayers that may have failed to comply with the internal revenue laws.