Circle Intends to Fulfill Customer Compliance on IRS Summons

Circle Intends to Fulfill Customer Compliance on IRS Summons 

Circle Internet Financial is contacting its clients on a summons from the Internal Revenue Service (IRS). Circle will submit records on US taxpayers for engaging in transactions amounting to at least USD 20,000 annually between 2016 and 2020.

IRS Summons on User Transactions for USD 20,000

Crypto company and stablecoin issuer Circle is in touch with its US clientele through email to fulfill its compliance with a summons from the IRS. This summons, issued on April 9, 2021, targets Circle and its associated subsidiaries. The IRS is seeking data on clients for transactions of USD 20,000 or more in any year between 2016 and 2020, according to the email from Circle. The company earlier offered crypto assets like Bitcoin (BTC) to its retail customers and briefly owned Poloniex.

Circle has since suspended these operations; it is neither in possession of Poloniex nor selling digital currencies to retail investors. Circle's email to the clients is an act of informing them about the company's intent for compliance. “We are writing to inform you that we are complying with this summons, which requires us to produce information specific to your account,” the company’s email said.

The mail further adds:

"If you have any concerns about this, we encourage you to seek legal advice from an attorney."

Circle Faces Kraken and Coinbase Summons Issue

Circle’s predicament is akin to a similar situation involving the San Francisco-based crypto exchange Kraken, where the IRS issued a summons seeking details on customers with yearly trading volumes of USD 20,000 between 2016 and 2020. Similarly, the IRS in 2018 mandated the San Francisco-based crypto trading platform, Coinbase, to share customer information. 

The Circle communication states that the summons issue remains unresolved, even after six months. The communications by the company alert the recipients to compliance, which might lead to tax filings for the years between 2016 and 2020. It suggests that clients should seek advice from a tax professional to fulfill tax obligations, if any.

What is your take on Circle’s message to US clients about the IRS summons? Please share your thoughts and opinions about this subject in the comments section below.