As the crypto community grows and trading volumes reach new highs, the United States is also putting more effort into ensuring that its Internal Revenue Service (IRS) can properly collect tax on cryptocurrencies.
U.S. Attorney Damian Williams, Deputy Assistant Attorney General David Hubbert, and IRS Commissioner Charles Rettig announced that U.S. Judge Paul Gardefe authorized the IRS to issue a “John Doe Summons,” a term used by the IRS when investigating unknown taxpayers.
The subpoena requires New York-based bank MY Safra to provide information about taxpayers who may have failed to report and pay taxes on their cryptocurrency transactions. According to the announcement, the IRS is specifically eyeing users of the SFOX crypto exchange.
The IRS believes that while cryptocurrency users are required to report profits and losses, taxpayers are not in compliance when it comes to digital assets. The government will use all of its tools to identify taxpayers and ensure everyone pays taxes, Williams said. He explained that:
“Taxpayers are required to truthfully report their tax liability on their returns, and liabilities arising from cryptocurrency transactions are not exempt.”
On the other hand, Rettig said that allowing the John Doe challenge supports their efforts to ensure that cryptocurrency taxpayers “pay their fair share.”
Related: Tax Expert Says Buying Cryptocurrency Is Tax Free
Meanwhile, analytics firm Coincub recently released a study showing which countries are the worst in terms of taxing cryptocurrencies. Belgium ranked first for a 33% capital gains tax and a 50% withholding on transaction income. The second place was taken by Iceland, Israel, the Philippines and Japan.
On September 6, the Australian government held a public consultation on a new law that would remove the consideration of cryptocurrencies as a foreign currency in taxation. The government gave the public 25 days to give their opinion on the proposal. If the law is signed, the definition of digital currency in the Goods and Services Tax Law will be revised.