The central theses
- The IRS has received approval to commission two companies, Circle and Poloniex, to exchange data on US investors.
- The regulator is looking for data on U.S. taxpayers who made transactions of $ 20,000 or more between 2016 and 2020.
- US regulators have a lot of tax efforts underway.
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The IRS will likely gain access to records from two crypto companies, Circle and Poloniex, in an attempt to root out tax evasion among US investors.
Circle and Poloniex share data
According to the U.S. Department of Justice (DoJ), a federal court in the Massachusetts District has authorized the Internal Revenue Service (IRS) to direct subpoenas at Boston-based blockchain payment company Circle and its former subsidiary Poloniex.
The legal action will require Circle and Poloniex to share data on customers in the US who made crypto transactions worth at least $ 20,000 between 2016 and 2020.
This type of arrangement is known as a John Doe subpoena, an investigative tool used by the IRS to locate data on certain US individuals who may have violated federal tax laws.
“The John Doe subpoena is a step the IRS can use to expose those who are improperly reporting their virtual currency transactions. We will enforce the law if we discover systemic violations or fraud, ”wrote IRS Commissioner Chuck Rettig.
The DoJ’s official announcement made it clear that no allegations are made that Circle was involved in any wrongdoing. Instead, the lawsuit is part of an “investigation into an identifiable group or group of people” that the agency suspects to be inconsistent with US tax laws.
Regulators have other tax efforts underway
The order is another example of how U.S. regulators have stepped up their efforts to oversee the cryptocurrency sector. In the past few years, Crypto Exchange has become known to Coinbase for working with the IRS and reporting user trading activities.
Regardless of the efforts of the IRS, the U.S. Treasury Department and FinCEN plan to enforce the KYC rules for self-hosted crypto wallets. The regulation would make it mandatory for US cryptocurrency companies to collect personal information associated with transactions over $ 3,000 and to report crypto transactions over $ 10,000.
At the time of writing, this author was holding Cosmos.
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