IRS Is Catching Crypto Tax Cheats Via John Doe Summons

  • Forbes
  • by:
The IRS is actively hunting for crypto tax cheats by demanding cryptocurrency exchanges release user information through “John Doe” summons. Once John Doe summons are issued, exchanges are legally required to release requested user information to the IRS. On March 30, 2021 a John Doe summons was issued to Kraken. On April 1, 2021, another John Doe summons was issued to Circle (owner of the cryptocurrency exchange Poloniex).

The John Doe summons issued to Kraken and Poloniex require exchanges to release user information from 2016 to 2020 on accounts with at least $20,000 in transaction value in any of those years. According to the IRS Commissioner Chuck Rettig, “The John Doe summons is a step to enable the IRS to uncover those who are failing to properly report their virtual currency transactions. We will enforce the law where we find systemic noncompliance or fraud.”

The IRS also believes that these summons will also encourage non-compliant crypto holders to be compliant with crypto taxes. “Tools like the John Doe summons authorized today send the clear message to U.S. taxpayers that the IRS is working to ensure that they are fully compliant in their use of virtual currency,” said Commissioner Rettig. 

Usually, summons issued to crypto exchanges are followed by the IRS sending out tax notices to individuals under investigation. For example, last year the IRS sent out Letter 6173, 6174 and 6174-A to American taxpayers in the aftermath of a previous John Doe Summons issued to Coinbase.

Taxpayers who have properly filed their crypto taxes during the years under investigation (2016 - 2020), should not be concerned about these subpoenas. However, those who have failed to file crypto taxes should consider filing delinquent tax returns. If any cryptocurrency transactions were omitted or misreported in previous filings, taxpayers can also consider amending those returns after consulting with a qualified tax professional or cryptocurrency tax software.

Help FAIRtax Become The Number One Issue in 2021

Enacting the FAIRtax must be a prominent topic in these times. We did it before, we can do it again, but we need your help!

Your gift of $25, $50, $100 – even $1,000 or more if you can possibly spare it – will help bring an end to the IRS and promote a FAIRtax. So, I urge you, please give as generously as you can.
To donate by check:
Americans for Fair Taxation
PO Box 4929
Clearwater, FL 33758

If you need to make changes to your existing Monthly Re-Occurring Donation with new card or billing address information, then Please call Adam Yomtov our New York State Co-Director. He is assisting with the administration of our donations, technology services, and website.

Please note: Inputting your new information at our website won't update your donation. The only way to update is by calling Adam Yomtov 917-689-3931 mobile.

Americans for Fair Taxation® is a 501(c)(4) non-profit, non-partisan grassroots organization solely dedicated to replacing the current income tax system with a fair, simple and transparent national consumption tax – the FAIRtax® Plan. We rely entirely on contributions from concerned citizens like you who want a tax system that will generate jobs and stimulate the economy. Welcome to the FAIRtax team!