M.Y. is required to sign the summons. M.Y. Safra Bank will provide information on taxpayers who have failed to pay crypto taxes and report them to the bank. The crypto community is growing and trading volumes are reaching new heights.
Therefore, the United States is making greater efforts to ensure its Internal Revenue Service (IRS), could correctly collect cryptocurrency taxes.
U.S. attorney Damian Williams, Deputy Attorney General David Hubbert, and IRS Commissioner Charles Rettig announced the US judge Paul Gardephe authorized IRS to issue a John Doe summons. This is a term that the IRS uses when it investigates unknown taxpayers.
Information on users must be handed over to the IRS
M.Y., a New York-based bank is required to comply with the summons. Safra Bank is required to provide information on taxpayers who might not have reported and paid taxes on crypto transactions. The announcement states that the IRS will be specifically looking into users of SFOX, a crypto exchange.
According to the IRS, even though crypto users must report their profits and losses to government authorities, there is a lack of compliance by taxpayers regarding digital assets. Williams stated that the government will use every tool at its disposal to identify taxpayers, and ensure that all pay their taxes. He explained:
“Taxpayers must truthfully report tax liabilities on their returns. Liabilities that arise from crypto transactions are not exempt.”
Rettig stated that authorization of John Doe summons is in support of their efforts to ensure taxpayers who indulge in crypto “pay their fair share.”
Other countries fight to crackdown on crypto tax
Coincub, a crypto analytics company, recently published a study showing which countries are the worst when it comes to crypto taxation. The top ranking country was Belgium for its 33% capital gains tax and withholding 50% of income from trades. Japan, Israel, Japan, and the Philippines are runners-up.
The Australian government sought the opinion of the public on a new law that exempts crypto from being considered foreign currency in taxation. The government allowed the public to comment on the proposal for 25 days. The definition of digital currency will be changed in the Goods and Services Tax Act if it is signed into law.