IRS Steps Up Efforts To Crack Down On Crypto Tax Evaders
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(Kitco News) – Regulators appear to be making up for lost time on the crypto front, as Thursday reported that the Internal Revenue Service has set its sights on leading cryptocurrency dealer SFOX Inc., seeking the records of customers to ensure that users pay their taxes.
Based on court filings in New York and Los Angeles, the agency asked federal judges for permission to serve subpoenas on SFOX and MY Safra Bank, SFOX’s banking partner, which offered clients deposit accounts cash backed by the Federal Deposit Insurance Corporation.
The survey primarily focuses on customers who made more than $20,000 in cryptocurrency transactions in a year, from 2016 to 2021. According to rules set by the IRS, users can purchase assets with US dollars and hold in their wallets without being subject to tax. But once an asset is sold or traded, it becomes a taxable event, and traders are expected to report those activities when they file their taxes.
According to documents provided by the government, SFOX’s 175,000 registered users have made more than $12 billion in transactions since 2015.
SFOX was founded in 2014 and is backed by several well-known companies, including Digital Currency Group, Blockchain Capital, Y Combinator, and Airbnb co-founder Nathan Belcharczy.
Earlier in 2022, SFOX was approved by the State of Wyoming for a charter of trust, which allowed the company to provide custody and other crypto-related services to institutional clients. The charter allowed the company to operate as the SAFE Trust Company, which serves institutional clients, private clients and advisers.
The hunt for tax crypto-congressors
In May, Barclays Plc released analysis showing that cryptocurrency investors are paying less than half the taxes they own, leading the IRS to make crackdowns on the industry a top priority.
According to court documents filed Monday in Los Angeles, “Cryptocurrency transactions have increased dramatically in recent years, and the IRS is concerned that taxpayers are misreporting these transactions on their tax returns.”
SFOX is not the first exchange to face such requests from the IRS, as several major US-based organizations, including Coinbase, Kraken and Circle Internet Financial, have been subject to these summonses “John Doe by federal regulators.
This week’s actions against SFOX are part of a broader push by US regulators to establish greater oversight of the crypto industry. Recent developments include the introduction of a bill to classify Bitcoin (BTC) and Ethereum (ETH) as securities and the passing of a proposal that will require hedge funds to report their exposure to the cryptocurrency. change.
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