A U.S. federal court has authorized the Internal Revenue Service, or IRS, to file a John Doe subpoena against fintech firm Circle, seeking any information about U.S. taxpayers who paid at least $ 20,000 between 2016 and 2020 of crypto assets traded on its platforms.
The subpoena applies to Circle Internet Financial Inc. including all “predecessors, subsidiaries, divisions and affiliates, including Poloniex LLC.”
According to the Ministry of Justice AnnouncementJudge Richard Stearns concluded that there is “a reasonable basis to believe that cryptocurrency users may not have complied with federal tax laws.”
The document also notes that the IRS “does not claim that Circle has been guilty of any misconduct in connection with its digital currency conversion activities,” adding:
The subpoena asks for information pertaining to the ‘IRS investigation of a verifiable group or class of persons’ of which the IRS has a reasonable basis to believe ‘may not have complied with any provision of internal revenue laws.’ ”
A Circle representative told me Law 360: “We are reviewing [the summons], and of course expects to work with the IRS to respond to the injunction. “
Attorney General David Hubbert of the Justice Department’s tax department said, “Those who transact with cryptocurrency must meet their tax obligations like any other taxpayer. The Justice Department will continue to work with the IRS to ensure cryptocurrency owners pay their fair share of taxes. “
Circle was founded in October 2013 by Jeremy Allaire and Sean Neville, and the company launched a Bitcoin wallet the following year that later became the crypto payment application. Circle PayIn 2018, Circle launched USD Coin in partnership with Coinbase, which now has the second largest stablecoin by market capitalization.