Paying taxes on crypto has been something that the IRS has been very insistent on for quite a long time now. However, a lot of people who earn money through crypto trading still seem to believe that the nature of crypto and blockchain technology might be enough to protect them. Many also seem convinced that, even if the IRS did move to hunt down crypto traders who have been avoiding taxes, it likely won’t get them all, and that some might get away with it.
However, the recent court ruling has given the US’ tax authority all the authorization it needed to start seeking out crypto users across the states and ensure that they are meeting their dues.
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The order came from the Federal court in Northern California. The court seemingly authorized the IRS to serve a so-called ‘John Doe’ summons on San Francisco-based exchange, Kraken. Essentially, the summons allows the authorities to go after people even if they don’t know their name, as long as there is a possibility of some wrongdoing taking place.
Furthermore, it seems that the IRS is seeking info about US taxpayers who conducted at least $20,000 in transactions between the years 2016 and 2020. However, one thing that should be noted is that this might not include HODLers, who are not selling the coins that they purchased, and are, therefore, not making capital gains.
This is not the first time that the IRS received this kind of authorization, either. In Massachusetts, the agency received permission to send John Doe summons on the local crypto exchange, Circle.
With the crypto market being as volatile as it is, the IRS recognizes that taxpayers can have a gain or loss on sale, and it all depends on the price. So, those who experienced losses will not have a debt to settle, while those who have made gains will have to provide a piece of the pie to the government.
Clearly, this is, and will be quite complicated to deal with and calculate how much do traders owe to the IRS. But, there is no doubt that the IRS is coming for anyone who made gains for crypto, and that it will want its share.