The IRS seeks information about a taxpayer “allegedly involved” in a Ponzi scheme and a “Youtube creator, and online gambler.” A California court granted permission for the U.S. Internal Revenue Service to issue a John Doe summons to prime brokerage SFOX.
The summons will be issued to anyone who has completed transactions worth at least $20,000 between 2016 and 2021.
Hubbert stated in a memo concerning the SFOX summons that IRS Agent Seng Le identified 10 taxpayers who were suspected of evading tax laws.
These taxpayers include someone who “allegedly participated in a Ponzi Scheme” and received $1 million in deposits via SFOX. However, they did not report the funds to the IRS in 2016, 2017, 2018 or 2017. The IRS and DOJ are also looking for information about a “Youtube creator” and “online gambler” who, according to the IRS, received approximately $120,000 from their subscribers and exchanged it for U.S. Dollars through an SFOX account. However, they did not report it on their tax returns.
“The summons approved today will allow us to make sure that cryptocurrency owners follow the tax laws,” said Deputy Assistant General David Hubbert in a press statement.
SFOX does not have to be convicted of any wrongdoing if a summons is approved. However, it does mean that SFOX will need to list all users who meet the government’s criteria. The tax regulator would then compare names and transaction history with other data in order to determine whether people have violated tax law.
This is the latest effort by the IRS and Department of Justice to catch crypto traders who have failed to report transactions on tax returns.
The IRS was granted permission by courts to issue a John Doe summons in 2017 to Coinbase. The IRS was granted permission to issue a John Doe summons to Coinbase in 2017. In spite of some initial pushback, the courts approved John Doe summons being issued to Kraken and USD Coin issuer Circle (alongside Poloniex which separated from Circle this year).
Other taxpayers included people who had deposited thousands of Bitcoin or other cryptocurrency into SFOX accounts and exchanged it for dollars. They then transferred the money to their personal bank accounts and failed to report any gains or losses.
