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NextGen Magazine

 
 

Judge Sides with IRS on Bitcoin Tax Case

By:
Chris Gaetano
Published Date:
Nov 30, 2017
IRS

A U.S. Magistrate Judge in San Francisco sided with the IRS over digital currency exchange Coinbase regarding an investigation into whether users aren't reporting their gains to authorities, according to Accounting Today. About a year ago the IRS demanded that the company give them the personal data of all U.S. users that made transactions through the company between 2013 and 2015. The IRS, in the filing, said that it has launched an investigation to determine the correct federal tax liabilities of U.S. taxpayers who conducted transactions using convertable virtual currency, noting that they may or may not be complying with all the relevant laws regarding reporting taxable income from virtual currency transactions. It said that there is a reasonable basis for believing that such group or class or persons may fail, or may have failed, to comply with one or more provisions of the internal revenue laws.

Coinbase resisted this order, saying that it cast too wide a net and was intrusive to the privacy of its customers, but the judge was not convinced. She said that only 800 to 900 taxpayers reported gains related to bitcoin, out of 14,000 Coinbase users who have bought, sold, sent or received at least $20,000 worth of the digital currency in a given year. With this in mind, the judge felt that it is likely that at least some of these users are not reporting their gains, therefore justifying the inquiry.