The IRS has been granted a court order to collect records from a bank the agency said will help it identify US taxpayers who failed to report taxable income from crypto trades.
Uncle Sam yesterday said it’s specifically going after records from New York-based bank M.Y. Safra, which partnered with SFOX – a cryptocurrency prime broker – to offer the latter’s customers access to cash-deposit bank accounts. SFOX users could thus use funds at M.Y. Safra to buy and sell digital coins.
The IRS was granted a similar request against SFOX in August. Both organizations were served with “John Doe” summons, a tactic used by the IRS when it investigates wrongdoing without knowing the names of the accused taxpayers.
Basically, the IRS reckons people have profited from trading cryptocurrencies via SFOX and M.Y. Safra, and haven’t declared that income nor paid the required tax on it, and so the agency wants to chase those people down and strap them into the wallet-emptying ass-kicking machine.
“The John Doe summons directs M.Y. Safra to produce records that will enable the IRS to identify U.S. taxpayers who were customers of SFOX and who engaged in cryptocurrency transactions that may not have been properly reported on tax returns,” the agency said.
According to the IRS, its probing into the world of cryptocurrencies has revealed “significant tax compliance deficiencies” across the industry, and that it “has strong reason to believe that many virtual currency transactions are not being properly reported on tax returns.”