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Zhanna Ziering Comments on Recent Cryptocurrency John Doe Summons in Tax Notes

April 1, 2021, Tax Notes

An IRS quest for customer account data from cryptocurrency exchange Kraken hit a roadblock after a California district court expressed concerns over the scope of the agency’s John Doe summons.

While the IRS has likely made a sufficient showing that it meets the first three elements of the section 7609(f) John Doe summons statute, “The Court has concerns . . . with respect to scope,” Chief Magistrate Judge Joseph C. Spero of the U.S. District Court for the Northern District of California said in a March 31 show cause order in In the Matter of the Tax Liabilities of John Does.

. . .

Spero’s order directs the IRS to file a response by April 14 showing why its petition shouldn’t be denied for failure to meet the “narrowly tailored” requirement of section 7609(f).

“Any such response must specifically address why each category of information sought is narrowly tailored to the IRS’s investigative needs, including whether requests for more invasive and all-encompassing categories of information could be deferred until after the IRS has reviewed basic account registration information and transaction histories,” the order says.

. . .

Zhanna A. Ziering of Caplin & Drysdale said, “It looks like the judge is accepting some of the requests, so the IRS may just narrow the subpoena at the first instance.” Ziering said she, too, is interested in what the IRS says in its response.

For the full article, please visit Tax Noteswebsite (subscription required).


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