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In a significant development in the cryptocurrency sector, Kraken, a leading U.S. cryptocurrency exchange, has announced it will disclose specific user data who conducted transactions over $20,000 between 2016 and 2020 to the Internal Revenue Service (IRS) in November, 2023.

This decision comes in the wake of a prolonged legal battle over crypto tax reporting that began in May 2021.

Who will be Affected?

In its search for potential tax evaders, the IRS initially requested a wide range of Kraken's U.S. client records.

However, standing firm on its commitment to safeguard client privacy, Kraken resisted the sweeping demands, leading to an extended litigation process. 

While the exchange managed to limit the scope of the IRS's request, the court eventually mandated Kraken to furnish details and transaction records of users who had transacted over $20,000 in any single year spanning from 2016 to 2020.

What Details Need to be Shared?

As per the court's directive, Kraken is set to provide the IRS with user details, including names, birthdates, taxpayer IDs, addresses, phone numbers, email addresses, and transaction histories for the stipulated years. This move is slated for early November 2023.

What’s Next?

Kraken has urged its affected clients to liaise with their respective tax consultants to address any potential tax implications stemming from their cryptocurrency transactions during the specified years.

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FAQs

1. Why is Kraken sharing user data with the IRS?

Kraken is complying with a court order that mandates the disclosure of specific user data to the IRS, stemming from a legal battle that began in May 2021.

2. Which users will be affected by this disclosure?

Users who have conducted transactions exceeding $20,000 in any single year from 2016 to 2020 will have their details shared with the IRS.

3. What kind of user information will Kraken provide to the IRS?

Kraken will share names, birthdates, taxpayer IDs, addresses, phone numbers, email addresses, and transaction histories for the specified years.

4. How can affected users address potential tax implications?

Kraken advises its impacted clients to consult with tax specialists to understand and address any potential tax liabilities related to their cryptocurrency transactions during the mentioned years.

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