The crypto community is growing and trading volumes are reaching new heights. This means that the United States is making greater efforts to ensure that its Internal Revenue Service can properly collect cryptocurrency taxes.
U.S. attorney Damian Williams, David Hubbert, Deputy Assistant Attorney General and Charles Rettig, IRS Commissioner, announced that U.S. Judge Paul Gardephe authorized IRS to issue a John Doe summons. This is a term used by the IRS when it investigates unknown taxpayers.
M.Y., a New York-based M.Y. 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.”
Related: Tax expert says crypto buying is not taxable
Coincub, a crypto analytics company, recently published a study showing which countries have the worst crypto taxation. Belgium was ranked first for its 33% capital gains tax and 50% withholding from income on trades. Japan, Israel, Japan, and the Philippines are runners-up.
The Australian government sought public input on a new law that would prohibit crypto from being considered foreign currency in taxation. The proposal was open to public comment for 25 days. The definition of digital currency will be changed in the Goods and Services Tax Act if it is signed into law.