IRS Seeks Names of Circle Customers Transacting Over $20K in Crypto

The Internal Revenue Service (IRS) can move forward with its efforts to unmask high-value customers at Circle Internet Financial, a federal judge ruled Thursday.

The judge authorized a request from the IRS to issue a “John Doe Summons” on all Circle and Poloniex customers who transacted $20,000 or more in crypto between 2016 and 2020. Such summons are a tactic the IRS uses to demand information on people it can not identify by name. (Circle spun out Poloniex in 2019 after buying the exchange for $400 million in 2018.)

The IRS told the court it needs the documents to ensure crypto users are paying their taxes. It believes many have not, and will now issue summons on the records to prove it. The IRS said this does not necessarily mean Circle has broken the law.

It does represent a continuation of the U.S. tax collector taking crypto investments more seriously for tax year 2020.

“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,” IRS Commissioner Chuck Rettig said in the press statement, adding:

“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.”

The agency has previously used John Doe summons to go after Coinbase, which fought the order for more than a year before ultimately complying, divulging nearly 14,000 customer records.

“We’re reviewing, and of course expect to work collaboratively with the IRS in responding to the court order,” Circle spokesman Josh Hawkins told CoinDesk via email.

UPDATE (April 2, 1:09 UTC): Adds comment from Circle.