Coinbase and the IRS both appeared in Federal Court today in San Francisco to continue their legal battle stemming from an investigation by the IRS in 2016. To those who are not aware of the history, the IRS began investigating and requested records for users of Coinbase, claiming a number of individuals, who trade Bitcoin or cryptocurrencies, failed to report any income on their tax returns. Coinbase has stood its ground from the beginning refusing to comply with any demands because they claimed the summons was overly broad and they wanted to protect their customers’ privacy.
The IRS later lowered their inquiry of all US customers to only records of accounts that engaged in transactions of over $20,000. The IRS argued in Court today to try and force Coinbase to hand over the data of their customers. However, Coinbase stood by their day one commitment to fight and protect the privacy and records of their users. This is just the beginning of the IRS’s attempt to govern and regulate this space. Because this is the first case of its kind, the outcome of this case will most likely be precedent on what the IRS can or cannot obtain from other US exchanges in the future.
It is very important that the crypto community continues to voice their support for Coinbase in their battle against the IRS. David Farmer, Director of Comms at Coinbase, stated:
“We were proud to appear in court today, together with support from industry colleagues, to continue to fight against what we believe to be government overreach. In the future we hope to work with the IRS to establish a reasonable tax reporting method that makes sense for virtual currency service providers and consumers alike.”
We will update the situation as soon as we are able to obtain the written order of Judge Corley in regards to today’s hearing.
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