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The United States Internal Revenue Service (IRS) has been authorized to issue a “John Doe” subpoena to MY Safra Bank, a court in New York ruled Thursday. The summons will compel the bank to produce information about customers who allegedly failed to report and pay taxes on crypto transactions through master reseller SFOX.

In its motion in support of the subpoena, the IRS pointed to “significant tax compliance deficiencies” related to cryptocurrency transactions made through the SFOX platform.

“Taxpayers who transact with cryptocurrency should understand that income and gains from cryptocurrency transactions are taxable,” U.S. Attorney Damian Williams said in a statement, adding that the information sought by the subpoena “will help ensure that cryptocurrency owners comply with tax laws.”

SFOX, which has over 175,000 registered users who have collectively made over $12 billion in trades since 2015, connects crypto exchanges, over-the-counter (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, users can use these accounts to buy and sell digital assets.

“The government’s ability to obtain third-party information on those who fail to report their earnings from digital assets remains a critical tool in catching tax evaders,” said IRS Commissioner Charles Rettig.

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

“Taxpayers who derive income from digital asset transactions must comply with their filing and reporting responsibilities,” he added.

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IRS Hunts Down Crypto Tax Evaders

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

In August of this year, a California court decision authorized the U.S. tax agency to serve a subpoena against SFOX, requesting information about any “U.S. taxpayer who conducted at least $20,000’s worth of cryptocurrency transactions between 2016 and 2021 with or through SFOX.”

Some people included in a petition included a person who was “allegedly involved in a Ponzi scheme” and received around $1 million in deposits through SFOX, but did not report it to the IRS in 2016, 2017 or 2018 Other people allegedly deposited thousands of dollars worth of Bitcoin and other cryptocurrency into SFOX accounts, exchanged it for dollars, transferred the money to personal bank accounts, and then did not report. gain or loss on transactions.

In 2017, the Courts Allowed the IRS to Issue a “John Doe” Summons to the Crypto Exchange Coinbase. This led to the company sharing information about around 14,000 of its users.

In April last year, the courts again approved the “John Doe” summonses issued for the crypto exchange kraken and Circlethe issuer of stablecoin USDC.

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