Coinbase IRS Taxes – Tax Records Required For Crypto Customers?
Coinbase and the IRS have been butting heads since last year. On Wednesday, that battle came to a peak as a court ordered Coinbase to give user information to the Internal Revenue Service (IRS).
Coinbase is being forced to disclose information about users who made transactions over $20,000 between 2013 and 2015. The request includes information from 14,355 Coinbase customers and 8.9 million transactions.
This latest order comes nearly one year after the IRS first asked Coinbase to reveal customer information. It also comes as the price of bitcoin reaches yet another all time high, breaching the $10,000 and $11,000 marks before the end of November before retreating.
Coinbase is one of the world’s leading cryptocurrency exchanges. It’s particularly popular among American crypto users, who have a number of easy ways to buy bitcoin and Ethereum through the platform – like through their ordinary bank accounts and credit cards.
In total, this latest order is expected to reveal the transaction history of over 14,000 users and nearly 9 million transactions. That data includes their names, birth dates, addresses, tax IDs, transaction logs, account invoices, and more.
That may sound like a lot of information – but it’s not as much information as the IRS initially wanted. When the organization initially summoned Coinbase in November 2016, they sought information about every single transaction that had taken place on Coinbase.
Coinbase fought back against that initial request, arguing that it was a violation of the privacy of its users. In response, the IRS filed a petition to enforce the summons. That petition was filed in March 2017, and the court ordered Coinbase to reveal those transaction records this past week.
Coinbase Calls the Ruling an “Unprecedented Victory”
It’s easy to see this as a loss for Coinbase, because they’re being forced to turn over thousands of user records to the IRS.
However, a blog post from Coinbase on Wednesday celebrated the ruling, calling it an “unprecedented victory for the industry.”
“The government’s own lawyers noted at the hearing that the IRS is not accustomed to having to fight for records in this context, and most companies just turn records over without going to court,” David Farmer, director of business operations at Coinbase, explained in the blog post.
Farmer added that the number of customer records being disclosed to the IRS is 97% lower than the number initially requested by the IRS.
Coinbase Will Notify All Affected Customers
Have you performed any transactions over $20,000 on Coinbase? You’re probably trying to do math in your head to figure it out.
Fortunately for Coinbase users, the company plans to notify all users if their records are disclosed to the IRS:
“In the event that we ultimately produce the documents under this court order,” explained Coinbase in their blog post, “We intend to notify impacted users in advance of any disclosure.”
Despite Coinbase claiming victory, they took another loss from the court ruling. Wednesday’s court order denied Coinbase’s request for an “evidentiary hearing”. Coinbase was expected to use an evidentiary hearing to argue that the IRS showed bad faith when requesting documents from the company.
Cryptocurrency research and advocacy group Coin Center issued a statement on the ruling, stating that they were “deeply unsatisfied with the lack of justification provided by the IRS.” They warned that the case “sets a bad precedent for financial privacy.”
Crypto media platform CoinDesk uploaded a complete version of the court order to Scribd. You can view that filing here. It’s listed under 365893210 US v Coinbase.