Skip to main content

IRS Now Seeks Identities of American Cryptocurrency Traders

Bitcoin cryptocurrency
(Image credit: Shutterstock)

A federal court in the Northern District of California have authorized the United States Internal Revenue Service (IRS) to identify taxpayers that have used a cryptocurrency exchange. In particular, the IRS wants to know about taxpayers who conducted at least $20,000 in crypto transactions from 2016 to 2020. 

Cryptocurrencies were originally designed to be an anonymous payment method that could not be regulated by governments. But as they have become a widespread payment instrument as well as an investment asset for those who want to protect their savings and/or make some additional money, they quickly emerged on the radar of tax collecting agencies, such as the IRS. Although crypto transactions are still anonymous, the process or buying or selling cryptocurrencies is not. To that end, it is not surprising that the IRS want to know about U.S. taxpayers who used cryptocurrencies in the past few years. 

For now, the court in California authorized the IRS to identify Americans who have used the services of Payward Ventures Inc. and its subsidiaries, such as Kraken, a digital currency exchange headquartered in San Francisco, California. The IRS is seeking information about taxpayers who conducted at least the equivalent of $20,000 in transactions. Meanwhile, on April 1, 2021, a federal court in the District of Massachusetts granted an order for the IRS to serve a similar John Doe summons on Circle, an exchange from Boston. In the future, the IRS may be authorized to identify customers of other crypto exchanges.  

"Gathering the information in the summons approved today is an important step to ensure cryptocurrency owners are following the tax laws," said Acting Assistant Attorney General David A. Hubbert of the Justice Department’s Tax Division. "Those who transact with cryptocurrency must meet their tax obligations like any other taxpayer." 

It remains to be seen how serious the IRS about taxing owners of cryptocurrency is. There are hundreds of crypto exchanges not only in the U.S., but around the world and theoretically an American taxpayer could use any of such services.

  • thepersonwithaface45
    Run run, as fast as you can, you'll never catch me, dirty tax man!!!
    Reply
  • InvalidError
    The hunt is on.

    Once the IRS realizes that tracking down US crypto-traders is next to impossible if they don't have an account with an US-based exchange linked directly to an US resident or bank account and limited leverage to do anything anywhere to collect crypto taxes, we'll be one step closer to an international crypto ban.

    I would have preferred that crypto got banned for environmental reasons (power and e-waste) but I'll take crypto getting banned for being a pyramidal tax evasion scheme that the tax men of the world have grievances with too.
    Reply
  • coolitic
    InvalidError said:
    The hunt is on.

    Once the IRS realizes that tracking down US crypto-traders is next to impossible if they don't have an account with an US-based exchange linked directly to an US resident or bank account and limited leverage to do anything anywhere to collect crypto taxes, we'll be one step closer to an international crypto ban.

    I would have preferred that crypto got banned for environmental reasons (power and e-waste) but I'll take crypto getting banned for being a pyramidal tax evasion scheme that the tax men of the world have grievances with too.

    Thankfully, banning crypto is also impossible 😄
    Reply
  • thepersonwithaface45
    coolitic said:
    Thankfully, banning crypto is also impossible 😄
    Your 666th Comment!
    Reply
  • Neuspeed
    This reminds me of a George Bush quote: 'Our enemies never stop thinking of new ways to harm our country and our people, and neither do we"
    Reply
  • InvalidError
    coolitic said:
    Thankfully, banning crypto is also impossible 😄
    While banning crypto-mining may not be possible, it can certainly be made worthless: ff most major countries agree to ban crypto exchanges and the use of crypto for payments, people won't be able to cash out and crypto will collapse.
    Reply
  • drivinfast247
    Uncle Scam wants his cut!
    Reply
  • Heat_Fan89
    Someone care to explain this to me because it seems like a contradiction. I know next to nothing about Cryptocurrencies.

    "Although crypto transactions are still anonymous, the process or buying or selling cryptocurrencies is not."
    Reply
  • spongiemaster
    Heat_Fan89 said:
    Someone care to explain this to me because it seems like a contradiction. I know next to nothing about Cryptocurrencies.

    "Although crypto transactions are still anonymous, the process or buying or selling cryptocurrencies is not."
    Using Bitcoin as an example. You can send and receive Bitcoin from other people and that isn't trackable. However, if you want to convert your Bitcoin to US dollars or other gov't back currency, or buy Bitcoin with them, assuming you are using a financial institution as source of those funds, then that is trackable.
    Reply
  • Heat_Fan89
    I've always viewed Crypto's like the Internet back in the 90's. The Gov't shied away from taxing purchases on the internet because if they did, people would not have bought and sold stuff and it would not be what it is today.

    Crypto's has been allowed to grow because it hasn't hurt the economy because those involved have made computer purchases for crypto mining. Now it's hurting the economy because it's having an impact on supply that's hurting automakers and others.

    Then of course people are making insane amounts of money so that always gets the governments attention. As the bumper sticker says: "Don't Steal The Government Hates Competition".
    Reply