IRS Forces Kraken To Produce Records of Users With Total Crypto Transactions Worth $20,000 or More

A new court order is forcing crypto exchange Kraken to give the Internal Revenue Service (IRS) some of its users’ data for the purpose of investigating potential tax violations.

In March 2021, the IRS filed a petition to identify Kraken accounts that engaged in crypto transactions worth at least $20,000 in any single year from 2016 to 2020.

In a court order dated June 30th, Judge Joseph C. Spero directs Kraken to supply the IRS with the names, birthdates, taxpayer identification number, physical and email addresses and telephone numbers of concerned account holders.

Spero says the IRS has a legitimate reason to seek information about certain Kraken users as the agency aims to address tax fraud.

“The Government has a legitimate purpose for seeking the materials described in the summon. As discussed above, the summons was issued in connection with an investigation by the IRS to determine the identity and correct federal income tax liability of U.S. persons who conducted transactions in cryptocurrency during the period 2016-2020.”

Spero says that the number of taxpayers filing tax returns for Bitcoin-related investments between 2016 and 2020 is dwarfed by the volume of trading activities on Kraken.

He also agrees with the IRS that “under-reporting of income is substantially higher where there is no third-party information reporting, as in the case of Kraken.”