Key TakeawaysKraken, one of the leading cryptocurrency exchanges, is in the process of notifying its users about the sharing of their data with the Internal Revenue Service (IRS). This initiative stems from a court approval which the IRS sought to ensure tax compliance among cryptocurrency traders.
The IRS’s interest in Kraken’s user data dates back to a summons issued in 2021. However, Kraken initially failed to comply with this summons. The IRS is particularly interested in identifying U.S. persons who conducted cryptocurrency transactions during the years 2016 to 2020, aiming to determine their correct federal income tax liability.
Affected Kraken users will have their names, dates of birth, tax identification numbers, addresses, contact information, and transaction histories for the specified years shared with the IRS. The sharing of this information is expected to commence in early November 2023.
The need for sharing this data also arises from the Infrastructure and Investment Jobs Act, signed in November 2021. This act mandates cryptocurrency brokers, like Kraken, to report customer activities to the IRS using a new Form 1099-DA.
A spokesperson from Kraken emphasized the company’s guiding principle of maintaining the security and privacy of its client accounts. Although the company was not served with the petition initially, it acknowledges the court’s concern over the scope of the summons and looks forward to addressing its concerns in court.
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