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Court Authorizes Service of John Doe Summons Seeking Identities of U.S. Taxpayers Who Have Used Cryptocurrency
justice.gov ^ | April 1, 2021 | Department of Justice

Posted on 04/02/2021 1:36:37 AM PDT by ransomnote

A federal court in the District of Massachusetts entered an order today authorizing the IRS to serve a John Doe summons on Circle Internet Financial Inc., or its predecessors, subsidiaries, divisions, and affiliates, including Poloniex LLC (collectively “Circle”), seeking information about U.S. taxpayers who conducted at least the equivalent of $20,000 in transactions in cryptocurrency during the years 2016 to 2020. The IRS is seeking the records of Americans who engaged in business with or through Circle, a digital currency exchanger headquartered in Boston.

“Those who transact with cryptocurrency must meet their tax obligations like any other taxpayer,” said Acting Assistant Attorney General David A. Hubbert of the Justice Department’s Tax Division. “The Department of Justice will continue to work with the IRS to ensure that cryptocurrency owners are paying their fair share of taxes.”

“Tools like the John Doe summons authorized today send the clear message to U.S. taxpayers that the IRS is working to ensure that they are fully compliant in their use of virtual currency,” said IRS Commissioner Chuck Rettig. “The John Doe summons is a step to enable the IRS to uncover those who are failing to properly report their virtual currency transactions. We will enforce the law where we find systemic noncompliance or fraud.”

Cryptocurrency, as generally defined, is a digital representation of value. Because transactions in cryptocurrencies can be difficult to trace and have an inherently pseudo-anonymous aspect, taxpayers may be using them to hide taxable income from the IRS. In the court’s order, U.S. Judge Richard G. Stearns found that there is a reasonable basis for believing that cryptocurrency users may have failed to comply with federal tax laws.

The court’s order grants the IRS permission to serve what is known as a “John Doe” summons on Circle. The United States’ petition does not allege that Circle has engaged in any wrongdoing in connection with its digital currency exchange business. Rather, according to the court’s order, the summons seeks information related to the IRS’s “investigation of an ascertainable group or class of persons” that the IRS has reasonable basis to believe “may have failed to comply with any provision of any internal revenue laws[.]” According to the copy of the summons filed with the petition, the IRS is requesting that Circle produce records identifying the U.S. taxpayers described above, along with other documents relating to their cryptocurrency transactions.

The IRS issued guidance regarding the tax treatment of virtual currencies in IRS Notice 2014-21, which provides that virtual currencies that can be converted into traditional currency are property for tax purposes. The guidance explains that receipt of virtual currency as payment for goods or services is treated as income and that a taxpayer can have a gain or loss on the sale or exchange of a virtual currency, depending on the taxpayer’s cost to purchase the virtual currency (that is, the taxpayer’s tax basis).

Topic(s): 
Tax
Component(s): 
Press Release Number: 
21-298


TOPICS: Miscellaneous
KEYWORDS: 1stcircuit; crypto; dmassachusetts; firstcircuit; rapinbilljudge; richardgstearns; richardstearns

1 posted on 04/02/2021 1:36:37 AM PDT by ransomnote
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To: ransomnote

The Democrats are back.


2 posted on 04/02/2021 1:43:32 AM PDT by Starcitizen (So Indian H1B crybaby trash runs Free Republic moderation??? Seems so. )
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To: ransomnote

The Treasury Dept. and FBI Have Begun Raiding Homes And Crypto Businesses For Using Too Much Bitcoin.

[The feds are calling it “money laundering,” etc.]

https://www.youtube.com/watch?v=D6s30rHVvaQ&ab_channel=SilverReportUncut


3 posted on 04/02/2021 3:17:19 AM PDT by Travis McGee (EnemiesForeignAndDomestic.com)
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To: ransomnote
…there is a reasonable basis for believing that cryptocurrency users may have failed to comply with federal tax laws.

i.e. Guilty until proven innocent.

4 posted on 04/02/2021 3:26:41 AM PDT by immadashell (New Planned Parenthood slogan: Black Babies’ Lives Don't Matter!)
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To: ransomnote

The Feds are less concerned about money laundering and avoiding taxes than they are about people avoiding the U.S. Dollar since it’s fiat currency.


5 posted on 04/02/2021 4:12:17 AM PDT by T.B. Yoits
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To: ransomnote; 100American; 3D-JOY; abner; Abundy; AGreatPer; Albion Wilde; AliVeritas; alisasny; ...

The war on crypto begins . . .

PING!


6 posted on 04/02/2021 4:15:56 AM PDT by Tolerance Sucks Rocks (GOP-free since 10/9/20)
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To: immadashell

Yep - that’s a much lesser standard than probable cause.


7 posted on 04/02/2021 4:18:31 AM PDT by circlecity
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To: ransomnote
Because transactions in cryptocurrencies can be difficult to trace and have an inherently pseudo-anonymous aspect, taxpayers may be using them to hide taxable income from the IRS.

And they may be using them to hedge against inflation, Ding Dong.*

*Not you, ransomnote.

8 posted on 04/02/2021 4:19:38 AM PDT by Tolerance Sucks Rocks (GOP-free since 10/9/20)
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To: Tolerance Sucks Rocks

The war on crypto begins . . .


The war on non-government issued crypto begins . . .


9 posted on 04/02/2021 6:22:55 AM PDT by PIF (They came for me and mine ... now its your turn)
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To: immadashell

“ i.e. Guilty until proven innocent.”

That’s how it works with the IRS. Every time.


10 posted on 04/02/2021 6:58:34 AM PDT by jdsteel ("A Republic, Madam, if you can keep it." Sorry Ben, looks like we blew it.)
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To: PIF

“ The war on non-government issued crypto begins . . .”

Let me pull my tinfoil hat down tightly and say:

Since the origins and daily care and feeding of cryptocurrency‘s are shrouded in secrecy how do you know it isn’t a government plot to pull everyone into cyber currency from the beginning?


11 posted on 04/02/2021 7:01:33 AM PDT by jdsteel ("A Republic, Madam, if you can keep it." Sorry Ben, looks like we blew it.)
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To: ransomnote

All your Bitcoins are belong to us.


12 posted on 04/02/2021 7:10:30 AM PDT by VTenigma (The Democrat party is the party of the mathematically challenged )
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To: jdsteel

Since the origins and daily care and feeding of cryptocurrency‘s are shrouded in secrecy

Don’t know about origins so much as I forgot the articles that detail that aspect. But 80% is made by the CCP in China if that helps. Also the Feds are studying switching to digital currency per article on FR yesterday.


13 posted on 04/02/2021 7:10:31 AM PDT by PIF (They came for me and mine ... now its your turn)
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To: ransomnote

Classic fishing expedition in defense of dollar legal tender monopoly.


14 posted on 04/02/2021 8:05:10 AM PDT by Pearls Before Swine
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To: Tolerance Sucks Rocks; Travis McGee; ransomnote
The Treasury Dept. and FBI Have Begun Raiding Homes And Crypto Businesses For Using Too Much Bitcoin.
[The feds are calling it “money laundering,” etc.]

The summons is just that; it has less legal standing than a warrant.
Under a summons, you can agree to comply, or disagree and fail to appear (you have a choice).
When you disagree, the Feds may go to the next step and get a Federal warrant to search and seize property and material which they feel pertainant to a criminal investigation.
This is just a means to have others (who may have information) to provide the Feds with information (as with email spam, it is considered -'phishing').
In reality, any form of currency not controlled by the Feds,or entrusted into an FDIC facility, is considered by the Feds to be "money laundering".

"Show me the man, and I'll show you the crime." - Lavrentiy Pavolivich Beria (father of the Russian Secret Police and the Russian gulag system).

15 posted on 04/02/2021 8:48:30 AM PDT by Tilted Irish Kilt
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To: ransomnote

Now that the big boys are firmly in crypto they will use the government to protect it and kick out the little guy. Great if you bought bitcoin in the past but that ship has sailed now. It will be used to protect the corporations for what they know is coming from the communist takeover of America.


16 posted on 04/02/2021 9:08:04 AM PDT by Organic Panic (Democrats. Memories as short as Joe Biden's eyes.)
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