US IRS Comes After Clients of Another Crypto Exchange

In a tax-related effort, the US Internal Revenue Service (IRS) is asking permission to look into the customers of crypto prime dealer SFOX Inc. and its partner.

The service responsible for collecting taxes is seeking to do just that – collect taxes, but this time it’s searching to identify the platform’s crypto customers, presumably those who have not yet paid this compulsory contribution to state revenue, Bloomberg reported.

A lawyer for the government was quoted as saying in the court papers filed Monday in Los Angeles that,

“Transactions in cryptocurrency have grown substantially in recent years, and the IRS is concerned that taxpayers are not properly reporting these transactions on their tax returns.”

Bloomberg cited court filings in New York and Los Angeles, per which the tax authority asked federal judges to allow it to serve summonses on SFOX, but also on M.Y. Safra Bank – which partnered with the platform back in 2019 to enable it to offer its customers cash deposit accounts backed by the Federal Deposit Insurance Corporation.

Per the report,

“The IRS is seeking account and transaction records for users with cryptocurrency transactions over [USD] 20,000 in any year from 2016 to 2021.”

As reported last year, the US has served similar information demands, called ‘John Doe’ summonses, seeking user information from crypto exchanges Kraken and Coinbase, and the USDC stablecoin issuer Circle.

In March this year, as reported, the IRS was reportedly considering more John Doe summonses on crypto exchanges as it expands scrutiny of digital assets.

The IRS has been targeting the crypto sector for a while now, with each move pretty much paving the way and setting precedents in this nascent industry.

Meanwhile, as reported, a case involving an alleged attempt to refund a couple’s tezos (XTZ) crypto staking tax bill could come to a head after one of the duo pushed for a “definitive ruling” that could change the way staking is taxed in the United States.

The IRS further stated that it believes the crypto and NFT space is beset with “fraud”.

____

– US Court Hints IRS May Have Violated Coinbase User’s Privacy Rights in Tax Audit 
– IRS Warning: The Taxman Cometh – For ‘Billions of Dollars’ Worth of Crypto

– ‘Guys, File Your Crypto Taxes, the IRS is Coming’
– Crypto Tax Trends in 2022: Increased Reporting, Updated Rules, and a Wealth Tax Debate

– Walking the Crypto Tax Tightrope in US
– Reports That IRS Won’t Tax Staking Rewards Create Legal Confusion in US; UK Taxman Updates Its Own Guidance