Bitcoin service ordered to hand over two years of user records to IRS

BitsPlan

Today in Northern California District Court, a federal judge ordered the Bitcoin wallet service Coinbase to hand over records of all transactions that took place during 2014 or 2015, as part of a larger investigation into possible tax fraud by Coinbase users.

“The taxpayers being investigated have not been or may not be complying with U.S. internal revenue laws requiring the reporting of taxable income from virtual-currency transactions,” the IRS wrote in its request. As a result, the agents argued, anyone conducting a virtual-currency transaction during that period could be reasonably suspected of tax fraud, and requested transaction records on that basis.

While money made through Bitcoin trading is taxable as income, reporting of that income is often inconsistent, so it is likely the records contain at least some instances of tax evasion. While transactions between wallets are visible in Bitcoin’s public ledger, only Coinbase has the necessary data to identify the owner of each of its wallets, a necessary step in assessing their tax status.

Still, Coinbase has expressed concerns about the broad scope of the order, which uses the possibility of fraud to justify wholesale collection of all transactions over the course of two years.

Read more ... source: TheBitcoinNews

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