With the growth of the crypto community and the achievement of new highs for trading volumes, the United States is at the forefront to ensure that the Internal Revenue Service (IRS) can properly collect taxes due.
United States Attorney Damian Williams, Deputy Assistant Attorney General David Hubbert, and IRS Commissioner Charles Rettig have announced that US judge Paul Gardephe authorized the IRS to issue a “John Doe subpoena,” a term used when the IRS investigates unknown taxpayers.
The subpoena obliges New York-based MY Safra Bank to provide information on taxpayers who may not have reported and paid taxes on their crypto transactions. According to the announcement, the IRS is specifically looking at users of the SFOX crypto exchange.
The IRS believes that while crypto users are required to report profits and losses, there is a significant lack of compliance by taxpayers when it comes to digital assets. According to Williams, the government will use all its tools for identify taxpayers and make sure everyone pays taxes. He illustrated that:
“Taxpayers are required to truthfully report their tax liabilities in their returns, and debts that arise from cryptocurrency transactions are not exempt.”
On the other hand, Rettig stated that the authorization of John Doe’s citation supports their efforts to ensure that taxpayers who engage in cryptocurrencies “pay their fair share”.
Meanwhile, cryptocurrency analytics firm Coincub recently released a study showing which countries are the worst in terms of cryptocurrency taxation. Belgium took the top spot with its 33% capital gains tax and 50% withholding tax on trade income. The runners up are Iceland, Israel, the Philippines and Japan.
On 6 September, the Australian government has consulted the public regarding a new law that would exclude cryptocurrencies from being considered as foreign currency in terms of taxation. The government gave the public 25 days to express their opinion on the proposal. If the law is passed, the definition of digital currency contained in the law on the taxation of goods and services of the country will be revised.
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