Embattled Texas crypto founder and Businessman Rowland Marcus’ efforts to quash IRS summonses over minor technical errors could hit a brick wall as the US Tax agency has filed an appeal to dismiss Marcus’ claims.
According to a Bloomberg Law report, the IRS argued in the US Court of Appeal against claims by Rowland Marcus Andrade and his company ABTC Corp that it lacked jurisdiction in the matter. The agency stated that it satisfied all the legal requirements when it slapped the crypto company founder with summonses on what it believed to be the company’s Houston office.
Allegedly Involved In Financial Misconduct
The dispute between Rowland Marcus and the tax agency stems from the agency’s investigation into the crypto company founder’s firm, ABTC Corporation, for what the agency believed were potential financial reporting violations under the Bank Secrecy Act. The legal proceedings date back to 2021, when the tax agency opened an investigation against ABTC to determine whether Marcus was involved in financial misconduct. In its latest brief, the tax agency argues:
“Because the IRS substantially complied with the RFPA, Andrade is not entitled to damages and attorney’s fees, contingent upon a statutory violation.”
Right to Financial Privacy Act
The tax agency reportedly issued summonses to JPMorgan Chase and Bank of America in May 2023, asking for financial records relating to Rowland Marcus and ABTC. However, according to Andrade, the IRS summonses violated his right under the Right to Financial Privacy Act as they failed to offer sufficient notification before seeking his records. Court filings show that Andrade’s attorney independently requested copies from the Taxman after discovering the summonses.
Long and Winding Legal Battle
The IRS is said to have reissued the summonses in September 2023 and directed the notifications to Rowland Marcus’s business address this time around. Nonetheless, there was yet another technicality, as the notices were returned about a month later because they were undeliverable. Later, in February 2024, the crypto company founder filed a legal suit in Texas asking the court to invalidate the IRS summonses because they had allegedly violated his financial privacy rights.
Andrade Filed another Appeal
However, the District Court ruled against Andrade in May 2024 after it found that the Taxman had complied with RFPA requirements by issuing new summonses and notifications. The court said the case was moot because the banks concerned had turned over the required financial records. After this last decision, Andrade once again filed an appeal to the Fifth Circuit in August, asking for a stay, hoping that the IRS would be stopped from reviewing his bank records while the appeal was ongoing.
Conclusion
The case against Rowland Marcus, which is pending in the Fifth Circuit Court, is meant to determine whether to uphold the District Court’s ruling or accept his appeal. Andrade faces charges dating back to 2020 when the SEC charged him and the then-CEO of NAC Foundation for offering unregistered securities of AML Bitcoin, a crypto token that Andrade and his co-accused claimed was a better version of Bitcoin.
Frequently Asked Questions (FAQs)
Do users have to pay taxes on Bitcoin in the USA?
The tax agency treats Bitcoin and other crypto assets as property, meaning they become a taxable event when you buy or sell and get either a gain or loss.
Does the US tax agency know I have Bitcoin?
Crypto is traceable since transactions are recorded on a public ledger accessible to all, including the taxpayer. The agency has advanced tools to help track crypto transactions and enforce tax compliance.
Is sending Bitcoin to someone else taxable?
All transactions to another wallet are subject to capital gains tax, but the tax rate depends on how long you hold the token and the price difference between buying and selling.
What are the tax rules for crypto?
Taxpayers must include gains from sales or exchanges of digital assets in their income.
References
Appendix Glossary of Key Terms:
IRS: Internal Revenue Service (IRS) The Internal Revenue Service (IRS) administers and enforces US federal tax laws.
Bitcoin: A cryptocurrency (a virtual currency) designed to act as money and a form of payment outside the control of any one person, group, or entity
Summonses: An order to appear before a judge, magistrate, or the writ containing such an order.
AML Bitcoin: A cryptocurrency project called “Anti-Money Laundering Bitcoin” allegedly created by Rowland Marcus Andrade,
Jurisdiction: The legal authority of a court to hear and decide cases
