Legal

IRS Makes New Push For Coinbase Data

The Internal Revenue Service (IRS) continues its efforts to gain access to United States Coinbase customer accounts, filing new documents in federal court to get the California-based company to turn over the records. Coinbase facilitates transactions of digital currencies like bitcoin and ethereum.

According to Forbes, court documents show that the IRS believes there could be wide-scale tax evasion related to virtual currency, citing that from 2013 through 2015, the IRS processed, on average, just under 150 million individual tax returns each year, but only 807 individuals reported a transaction using a property description likely related to bitcoin in 2013. In 2014, that number was just 893, and, in 2015, the number fell to 802.

The IRS filed its initial request — known as a “John Doe” summons because it doesn’t name a specific person — in November 2016. The documents asked for all United States Coinbase customers who transferred convertible virtual currency (in this case, bitcoin, since the company did not trade ethereum at the time) from 2013 to 2015.

While the request was granted, a Coinbase customer, Jeffrey K. Berns, filed a motion to prevent the summons as an “intervenor,” which would allow him to participate even though he had not been named in the original summons. The IRS then argued that since he named himself as a Coinbase user, Berns was no longer subject to the summons, and his motion was invalid.

Coinbase had also filed a motion to intervene, claiming that “the IRS offered only the slimmest of support for their expansive request.” But with a hearing scheduled for this week, both Coinbase and Berns recently withdrew their motions to intervene.

While the latest filing by the IRS is, according to Coinbase, “part of the ordinary process by which the government enforces a John Doe summons,” the company also says it “remains concerned with the indiscriminate and over-broad scope of the government’s summons, and we have produced no records under the summons.”

Coinbase is currently reviewing the IRS’s motion and promises to “continue to work with the IRS to assess the government’s willingness to fundamentally reconsider the focus and scope of the summons. If it does not, we anticipate filing opposition papers in court in coming months. We will continue to keep our customers updated as to status.”

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