ARTICLE · 19 APRIL 2021

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CRA Tax Audit & Prosecution For Canadian Crypto Users

Rotfleisch & Samulovitch P.C.

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On April 1, 2021, a federal court in the District of Massachusetts allowed the United States Internal Revenue Service to serve a John Doe summons on the Boston-based cryptocurrency exchange, Circle Internet Financial Inc. and on its spinout company, Poloniex LLC.

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David Rotfleisch

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Introduction - The IRS Amps Up Efforts to Collect Taxpayer Information from Cryptocurrency Exchanges

On April 1, 2021, a federal court in the District of Massachusetts allowed the United States Internal Revenue Service to serve a John Doe summons on the Boston-based cryptocurrency exchange, Circle Internet Financial Inc. and on its spinout company, Poloniex LLC.

An IRS John Doe summons requires a third party-in this case, Circle Internet Financial and Poloniex-to provide the IRS with information about unnamed, unknown taxpayers with potential tax liability. Specifically, the Internal Revenue Service wants Circle and Poloniex to identify all US-based clients who executed at least $20,000 in cryptocurrency transactions from 2016 to 2020. Circle and Poloniex must also surrender the cryptocurrency-transaction records for each affected taxpayer.

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