The U.S. Internal Revenue Service risks losing a blunt weapon in its years-long campaign to collect income taxes from cryptocurrency investors after a ruling from the 1st U.S. Circuit Court of Appeals.
an Aug. 15 ruling that requires SFOX, a cryptocurrency broker, to produce trading records for users who conducted trades totaling at least $20,000, pursuant to a John Doe summons.
“The John Doe summons remains a highly valuable enforcement tool that the U.S. government will use again and again to catch tax cheats,” IRS Commissioner Chuck Rettig said in the SFOX release. The IRS has said previously that after it sent warning letters to Coinbase customers identified through John Doe summonses, those crypto investors coughed up at least $25 million in unpaid taxes.
Harper believes the IRS obtained information about his trades from Coinbase and Abra, another U.S.-based crypto platform. He received a letter from the IRS in August 2019, notifying him that the agency "has information that you have or had one or more accounts containing virtual currency but may not have properly reported your transactions involving virtual currency.
Samp said he’s confident that the Coinbase ruling is distinguishable from Harper’s claims because Coinbase was a third party, not a taxpayer alleging a violation of constitutional rights.
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