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IRS Targets Crypto Tax Evaders With M.Y. Safra Bank Summons Over SFOX Data

IRS Targets Crypto Tax Evaders With M.Y. Safra Bank Summons Over SFOX Data

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The US Internal Revenue Service (IRS) has been granted authority to issue a “John Doe” subpoena to MY Safra Bank, a New York court ruled on Thursday. The subpoena obliges the bank to produce information about customers who may have failed to declare and pay taxes on crypto transactions through the main retailer SFOX.

In its petition supporting the challenge, the IRS cited “significant tax regulatory deficiencies” related to cryptocurrency transactions made through the SFOX platform.

“Taxpayers who trade in cryptocurrencies should understand that income and profits from cryptocurrency transactions are subject to taxation,” U.S. Attorney Damian Williams said in a statement, adding that the information requested by the subpoena “will help ensure that cryptocurrency owners comply with tax laws.”

With over 175,000 registered users who have collectively transacted over $12 billion since 2015, SFOX connects crypto exchanges, OTC virtual currency brokers and liquidity providers.

MY Safra Bank partnered with SFOX in 2019 to offer its customers cash deposit accounts backed by the Federal Deposit Insurance Corporation that allow users to buy and sell digital assets.

“The government’s ability to obtain information from third parties about individuals who failed to report their digital asset income remains an important tool in catching tax cheats,” said IRS Commissioner Charles Rettig.

According to Rettig, the court’s decision to grant the subpoena “reinforces our ongoing, significant efforts to ensure that everyone pays their fair share.”

“Taxpayers who earn income from digital asset transactions must meet their filing and reporting obligations,” he added.

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The IRS is chasing crypto tax evaders

This is not the first time that a US court has granted the IRS the right to collect information on customers involved in cryptocurrency transactions.

In August of this year, a California court ruling authorized the US Internal Revenue Service to serve a subpoena against SFOX, requesting information on all “US taxpayers who have completed at least $20,000 worth of cryptocurrency transactions between 2016 and 2021 with or through SFOX.”

Some of the individuals included in the petition included an individual “allegedly involved in a Ponzi scheme” who received approximately $1 million in deposits through SFOX but failed to report it to the IRS in 2016, 2017 or 2018. Others allegedly deposited thousands of dollars worth of Bitcoin and other cryptocurrencies through SFOX accounts, converted it into dollars, transferred the money to personal bank accounts, and then failed to report any gains or losses from the transactions.

In 2017, the courts allowed the IRS to issue a “John Doe” subpoena to a crypto exchange Coinbase. This resulted in the company sharing information about about 14,000 of its users.

In April of last year, the courts once again approved a “John Doe” challenge to crypto exchange Kraken and Circle, the issuer of the cryptosystem. stable coins USDC.

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