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IRS attempts to obtain a copy of every U.S. Coinbase bitcoin customer
The U.S. Internal Revenue Service has asked bitcoin exchange Coinbase Inc. for a copy of all of its U.S. users and their transactions.
A petition filed by the Department of Justice on behalf of the IRS in the District Court for the Northern District of California on Nov. 17 seeks approval to request the identities of U.S. Coinbase customers who transferred bitcoin between Dec. 31, 2013, and Dec. 31, 2015, according to court records.
While requesting all of Coinbase’s records, the filing noted that an IRS agent had identified three cases in which cryptocurrencies were used to avoid paying taxes, with two of those cases involving Coinbase customers with millions of dollars in annual revenues.
In a statement (via Coinbase), IRS agent David Utzke noted that in one case an individual had started using bitcoin after keeping his funds offshore previously.
… instead of repatriating his income from an ATM in the form of cash, Taxpayer 1 diverted his income to a bank which works with a virtual currency exchanger to convert his income to virtual currency. Once converted to virtual currency, Taxpayer 1’s income was placed into a virtual currency account until Taxpayer 1 used it to purchase goods and services. Taxpayer 1 failed to report this income to the IRS.”
Given the broad scope of the request, Coinbase has said that it will oppose the summons.
“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,” Coinbase said in a statement. “Our customers’ privacy rights are important to us and our legal team is in the process of examining the government’s petition.”
The petition presents privacy concerns, given that in pursuit of only two customers the IRS is seeking all on Coinbase’s records. In addition, there is concern about the type of summons being sought, as it requires no notice be given to those who have had their records seized. It’s not clear from reports when the court will make a ruling on the application.
Image credit: saturnism/Flickr/CC by 2.0
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