Coinbase has received a surprise summons from the US Internal Revenue Service (IRS), with the agency demanding transaction records of all US users since 2013.
Also read: IRS Fail: Treasury Audit Says it Can’t Manage Virtual Currencies
IRS: Suspicion Users ‘Failed to Comply’ With Tax Laws
The sudden focus on Coinbase, considered to be stringently compliant with regulatory requirements, comes as part of a crackdown on suspected US-resident tax evaders.
IRS requesting info from Coinbase on users transacting 2013-2015 @zerohedge #bitcoinhttps://t.co/9VERyUCpJa pic.twitter.com/25Rocwev6v
— Stephen Cole (@sthenc) November 18, 2016
In a document filing, the IRS issued a so-called ‘John Doe’ summons to Coinbase to seek out users who have “failed or may have failed to comply with provisions of the internal revenue laws.”
“[T]he IRS has commenced an investigation to determine the correct federal income tax liabilities, for the years ended December 31, 2013, 2014, and 2015, of United States persons who conducted transactions in a convertible virtual currency,” the filing confirms.
Coinbase ‘Very Concerned’ by Scale of IRS Request
Coinbase was quick to confirm the investigation, but appeared equally taken aback by the IRS’ stance.
“Although Coinbase’s general practice is to cooperate with law enforcement, we are very concerned with the indiscriminate breadth of the government’s request,” the company told Bitcoin.com in emailed comments.
Responding to a Reddit thread on the issue, Coinbase stated it would “work to protect privacy” as a priority.
“We take user privacy very seriously and will work to protect the privacy of our users in broad information requests,” it added. “We are taking a very careful look at this petition and the scope of the government’s authority as it relates to this request.”
IRS Feels Pressure From Damning Audit
The timing of the filing is particularly conspicuous. Just last week, the IRS was publicly criticized in a Treasury audit for failing to identify the potential for tax fraud by virtual currency users.
The audit also found the agency had done nothing to advise the public on tax compliance while using virtual currencies, a duty the IRS inherited from the Bank Secrecy Act in 2013.
Responding to the latter findings, a so-called “management’s response” stated:
“The IRS agreed that additional guidance would be helpful; however, the IRS conveyed that guidance allocation decisions are based on available resources and other competing organizational and legislative priorities.
What do you think about the IRS move? Let us know in the comments section below!
Images via Shutterstock, Coinbase
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