At Gordon Law, we’ve helped thousands of digital asset holders navigate IRS scrutiny, from IRS audits, FBAR reporting, to complex DeFi transactions, and everything in between. The latest development we have seen in IRS crypto enforcement is the potential exposure of returns that are very “old and cold” to ongoing audits. This is due to the protracted compliance by Poloniex and its parent corporation to the John Doe summons issued in 2021 by the IRS for Poloniex records. This implicates a powerful weapon the IRS may potentially wield: the tolling provision under IRC § 7609(e)(2). “Tolling”, in these circumstances, means suspension of the normal statute of limitations for civil and criminal purposes.
If you traded on Poloniex (or any similar exchange) between 2016 and 2020 and received a customer notification from Circle Internet Financial (Poloniex’s corporate parent) in late 2023 or an IRS “soft letter” (e.g., Letter 6173, 6174, or 6174-A), this update is for you. The extended response time by Poloniex to the summons may have kept your return’s statute of limitations open far longer than you expect, potentially exposing your 2016 to 2020 tax years to audit or assessment, even now, in 2026.
Here’s everything you need to know, with practical steps forward.
Background: IRS John Doe Summonses Targeting Crypto Exchanges
The IRS has aggressively used “John Doe” summonses (authorized under IRC §7609(f)) to pierce the veil of anonymity on crypto platforms. These court-approved demands require exchanges to hand over identifying information and transaction records for an entire class of unidentified U.S. taxpayers who meet specific criteria—no individual suspicion required, just a reasonable basis supporting the prospect of widespread tax noncompliance.
The first major crypto precedent was the 2016 Coinbase John Doe summons (covering 2013–2015 transactions). After narrowing the scope of the information requested , and after protracted enforcement litigation, Coinbase produced data on approximately 14,000 U.S. users. This triggered thousands of IRS “soft letters” and audits. One Coinbase user, James Harper, took his constitutional challenge (Fourth and Fifth Amendment claims under the third-party doctrine) all the way to the U.S. Supreme Court. But Harper’s petition for certiorari was denied in 2025, solidifying the IRS’s authority in these cases.
The Poloniex (Circle) John Doe Summons: What the IRS Requested
On April 1, 2021, the U.S. District Court for the District of Massachusetts authorized the IRS to serve a John Doe summons on Circle Internet Financial, Inc. (and predecessors, subsidiaries, and affiliates, including Poloniex, LLC).
The targeted class:
U.S. persons who directly or indirectly controlled accounts at Circle/Poloniex
With at least the equivalent of $20,000 in cryptocurrency transactions (any type: buys, sells, sends, receives) in any single year
During the period January 1, 2016 – December 31, 2020
The summons sought KYC/registration documents, transaction logs, account statements, correspondence, and more—broad in scope, but court-approved as narrowly tailored.
Circle publicly confirmed it would comply and, effective December 2023, notified impacted customers that it had at least begun the process of providing the clients’ specific account information to the IRS.
How IRC §7609(e)(2) Tolling of the SOL Works—and Why It Matters for Poloniex Users
This is the key technical provision that many traders are overlooking.
Under IRC §7609(e)(2), since Poloniex/Circle’s full response was not fully resolved within six months of summons service, the statute of limitations for assessment (§6501) and criminal prosecution (§6531) was automatically suspended for every person in the John Doe class. The tolling period ends only upon final resolution of the exchange’s response (full production of all required records, any enforcement proceedings concluded). At this point, it is not even clear if final resolution by document has occurred. However, based on recent audit activity in which GLG has been involved, the IRS may be taking the position that the suspension period of the statute of limitations is at least 34 months.
Normally, the Service has only 3 years to adjust a tax return. But, if you take the 34 months described above, and stack it on top of the six-year statute of limitations for returns that contain a “substantial understatement”—an omission of income in excess of 25% of their gross income reported on the return—now, the time during which the IRS can come after your return is approaching 9 years, probably more. And that puts the 2016 return back in play. For subsequent years, the IRS may have even more time.
The IRS has not exactly been forthcoming in terms of just how long the SOL was suspended by the Poloniex response to the summons. GLG is in the process of attempting to determine exactly what the length of this suspension is, through a FOIA request. When we know more, you will—but only if you keep yourself apprised by visiting the GLG website.
Stay tuned.
