IRS Petitions Coinbase for Data on All Active US Bitcoin Traders

[Jack]

The US Internal Revenue Service (IRS) has filed a motion asking the US Federal Court of Northern California to force Coinbase to disclose the personal details of all US users that have conducted Bitcoin trades between January 1, 2013, and December 31, 2015.

The IRS said the motion is part of a large-scale tax evasion investigation through which it's trying to identify persons that have received payments or stored funds in Bitcoin as a way to avoid paying US taxes.

IRS: There's a "tax gap" between Bitcoin users and the government
"Further, in the experience of the IRS, tax noncompliance increases when there is no third-party information reporting. That is, taxpayers are less likely to report and pay taxes on income that is not independently reported to the IRS by a third party," the IRS said.

"Based upon a review of the petition and supporting documents, the Court has determined that the “John Doe” summons to Coinbase, Inc. relates to the investigation of an ascertainable group or class of persons, that there is a reasonable basis for believing that such group or class of persons has failed or may have failed to comply with any provision of any internal revenue laws, and that the information sought to be obtained from the examination of the records or testimony (and the identities of the persons with respect to whose liability the summons is issued) are not readily available from other sources."

Coinbase, a Bitcoin exchange service, is a very popular destination for people looking into setting up a Bitcoin wallet, but it's especially popular in the US, since the company was founded and is based in San Francisco, California, near the center of the tech world.

Coinbase promises to fight the IRS in court
Following news of the IRS' motion, Coinbase management reacted both on Reddit and on the company's blog, promising to fight the IRS in court for its users and their privacy.

"Although Coinbase's general practice is to cooperate with properly targeted law enforcement inquiries, we are extremely concerned with the indiscriminate breadth of the government's request. Our customers’ privacy rights are important to us and our legal team is in the process of examining the government's petition. In its current form, we will oppose the government’s petition in court."​

Read more: IRS Petitions Coinbase for Data on All Active US Bitcoin Traders

 

[rosendalek]

Wait, let me guess. The 4th amendment. on a piece of paper from the 18th century

 

[Myriad]

@Jack Good article , thanks for posting .

It will be very interesting to watch how this one plays out .

It could be a big can of worms that gets opened here .
Many people who thought that Bitcoin transactions were anonymous are in for a mighty shock .

I reckon there are plenty of people in federal penitentiaries that could " wise them up " ,
not least the Silk Road guy .

The sad fact for them is that like most other things , once it's "out there" on the internet ,
there is no undoing it later.

Unless they can work out how to re-write the blockchain

Anyone who is interested in this aspect of Bitcoin might like to read about zcash .

 

[_CyberGhosT_]

Wait a minute, the US deemed it to be invalid currency.
If they are not recognizing it as a valid currency then
what right does the IRS have sticking it's nose in there ?

 

[Myriad]

Wait a minute, the US deemed it to be invalid currency.
If they are not recognizing it as a valid currency then
what right does the IRS have sticking it's nose in there ?

Good point !

It's hard to fathom the " what right " issue ; who knows what their thinking is ?

I'm thinking of The Mikado , and the character of Pooh-Bah ..... "Lord High Everything Else "

Al Capone certainly underestimated the extent of their powers