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Crypto Currency and the IRS Part 2 of 3
- In 2016 the IRS issued a John Doe Summons to a company Coin Base (John Doe Summons is when the IRS knew there were many people doing business with Bitcoin that were non-compliant) so they believe that there was a descrete group of non-compliant taxpayers they wanted to identify. The IRS searched and IRS electronic data base for Bitcoin items and found only about 900 returns per year on Schedule D with Bitcoin but knew there were many more. As an example Coin Base had 5.5 million customers and 30-40% were in the US. This identified 15,000 names.
- IRS has also used artificial intelligence to match up on the Blockchain, the wallet addresses and transactions. The IRS has good capabilities on this and has identified many people were not tax compliant.