Coinbase Versus IRS Heats Up

There’s new news in the ongoing battle between bitcoin and ether exchange and platform startup Coinbase and the IRS. The request for Jeffrey Berns’ Coinbase user records has been nullified by the IRS, while the request for the other millions of accounts still remains.

For background: In mid-November of this year, the IRS sought access to Coinbase’s user records between December 31, 2013, and December 31, 2015, as part of an investigation into alleged tax violations connected to digital currency. When permission was granted, Coinbase user and attorney Jeffrey K. Berns filed a motion in federal court seeking to block the IRS from accessing personal, transactional and security data.

Berns’ motion alleges handing over Coinbase data to the IRS would risk exposing the data to hackers given that the IRS was hacked between 2014 and mid-2015. The motion is currently scheduled to be heard on January 19, 2017. Berns has also requested that the court schedule an evidentiary hearing and allow Berns to obtain documents and a deposition from the IRS.

But now, according to an IRS court filing from Dec. 28, Berns is no longer a target of its records request. Since Berns identified himself in his filing and the IRS request was only for the data unidentified users, he is now exempt — despite the fact that none of his Coinbase data was turned over to them. The IRS is now requesting that Berns’ request to block be thrown out.

Berns’ law firm responded by saying, “The IRS’ willingness to withdraw the summons as to Mr. Berns only because it is now aware of his identity makes it clear that the IRS does not have a legitimate purpose in seeking substantial personal and financial information concerning approximately 3 million Americans.”

Coinbase previously stated it would oppose government efforts to obtain customer information. The company is the largest virtual currency exchange in the U.S. It is licensed in 34 states, the District of Columbia and Puerto Rico and operates in 32 countries.


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