IRS Requires Kraken to Provide Records of Users Engaging in Crypto Transactions Valued at $20,000 or Above

Court Order Compels Kraken to Share User Data with IRS for Tax Investigation

In a recent development, the Internal Revenue Service (IRS) has obtained a court order requiring popular cryptocurrency exchange Kraken to disclose certain user data as part of an ongoing investigation into potential tax violations. This order, issued by Judge Joseph C. Spero on June 30th, comes after the IRS filed a petition in March 2021 seeking to identify Kraken accounts involved in cryptocurrency transactions valued at $20,000 or more in any single year from 2016 to 2020.

To comply with the court order, Kraken is required to provide the IRS with a range of information about the account holders involved. This includes their names, birthdates, taxpayer identification numbers, physical and email addresses, as well as telephone numbers. Judge Spero justified the order by acknowledging the IRS’s legitimate interest in gathering this data to address potential tax fraud.

The court order also highlights the significant difference between the number of taxpayers who reported Bitcoin-related investments on their tax returns between 2016 and 2020, and the considerably higher volume of trading activities observed on the Kraken platform. Judge Spero concurs with the IRS’s assertion that the lack of third-party information reporting, as is the case with Kraken, significantly contributes to the under-reporting of income.

The IRS’s investigation seeks to determine the identities of U.S. individuals who engaged in cryptocurrency transactions during the specified period and ensure their correct federal income tax liability. By compelling Kraken to disclose the requested user data, the IRS aims to shed light on potential tax irregularities and combat tax evasion within the cryptocurrency ecosystem.

As this investigation unfolds, Kraken users and the wider cryptocurrency community will undoubtedly keep a close eye on the outcome and any potential implications for tax compliance in the digital asset space.

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Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.

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