William Zietzke states that the summons for financial records is too broad. The IRS states that the multiple years of financial details are necessary, due to the profit made from Bitcoin.
The United States Internal Revenue Service recently issued a summons on Coinbase, the major cryptocurrency exchange in the country. Filed on November 15th, the tax agency was recently forced to confirm that the investigation is legitimate, pursuing information on a customer named William Zietzke.
Presently , Zietzke is trying to shut down the summons, which was delivered originally to Coinbase Inc. in June. The IRS stated that they wanted the financial records for Zietzke, in regard to the 2016 return filed by him. In response, Zietzke stated that the request from the summons was too broad, since it didn’t restrict the IRS to only the 2016 tax year. He also stated that the records requested by the IRS would put his financial and personal security at risk, in the event they were lost.
Unfortunately, the IRS decided that they weren’t convinced, and stated that there has yet to be a reason that the resident from Washington has been able to prove to stop the summons from being enforced.
The agency seemed to shrug off the allegations from Zietzke, which implied that the agency is creating a database to give them the ability to track anyone who has a virtual currency account. The filing stated,
“Rather than allow the IRS to summon the information it needs from Coinbase, Mr. Zietzke invents an IRS surveillance conspiracy and argues that the IRS has all the relevant information it needs to determine whether he is entitled to the refund he claims – that is the limited, sometimes redacted, and ever changing information he has provided.”
The IRS also stated that it is looking to specifically examine the tax liability, and that the records they requested after 2016 were important to determining this liability. According to the documentation, Zietzke claimed a refund involving transactions with Bitcoin he accumulated in 2011.
Andrew Yang, one of the Democratic presidential candidates for the 2020 election, promised that he would push for legislation involving the cryptocurrency space, which would involve establishing an official definition of a token. Proposed in November, it would also include the circumstances that would make the token a security and the potential consequences of purchasing, selling, and trading digital assets.
Five months earlier, U.S. Congressman Ted Budd testified before the House of Representatives Ways and Means Committee, discussing the current concerns regarding cryptocurrencies. Budd stated that this industry is in need of regulations regarding tax laws.
Clarifying Crypto Tax Laws
The tax laws regarding the profits from Bitcoin and other cryptocurrency asset trading transactions is still a little unclear. However, even big tax preparation self-service programs make it possible to report this revenue. Unfortunately, the IRS recently discovered one Washington resident wasn’t playing by the rules.