Tax Liabilities Prompt IRS to Request User Data from Kraken

Crypto exchange Kraken, headquartered in San Francisco, was mandated by a US judge to share customer data with the Internal Revenue Service (IRS). According to a court document submitted on Friday, the IRS seeks information about accounts that have witnessed annual trading activity exceeding $20,000 from 2016 to 2020.

Earlier in February, the IRS presented a court petition to the Northern District of California. The agency expressed its intention to meticulously scrutinize Kraken’s financial data and records. The objective was to pinpoint cryptocurrency users who might have overlooked their tax responsibilities. The request specifically involved access to Kraken’s assortment of “books, records, papers, and other data.”

The petition was an official announcement of the IRS’s investigative process. The goal is to identify and determine the accurate federal income tax liability for US individuals involved in cryptocurrency transactions from the end of 2016 to 2020.

The IRS had previously reached out to Kraken’s parent company, Payward Ventures Inc., in 2021. The agency’s summon was an attempt to acquire customer data for traders who operated on the platform during the specified years. The government asserts that it has legitimate grounds for demanding the material specified in the subpoena. Judge Joseph C. Spero agreed, stating that the IRS has the right “to obtain items of even potential relevance to an ongoing investigation, without reference to its admissibility.”

In alignment with the IRS’s plea, Spero authorized Kraken to reveal extensive user information. This includes full names, pseudonyms, user IDs, dates of birth, taxpayer identification numbers, physical addresses, phone numbers, and email addresses. This mandate applies to all Kraken users who have conducted cryptocurrency transactions of any kind, totaling or exceeding $20,000 during the indicated years.