reader comments 9
Share this story
As part of an ongoing tax evasion investigation, the Internal Revenue Service has asked a federal court to force Coinbase, a popular online Bitcoin wallet service, to hand over years of data that would reveal the identities of all of its active United States-based users.
David Utze, an IRS senior revenue agent at the IRS, wrote the following in a Thursday affidavit:
The information and experience of the IRS suggests that many unknown US taxpayers engage in virtual currency transactions or structures…
Because the IRS does not know the identity of the individuals within the “John Doe” class, the IRS cannot yet examine the income tax returns filed by those US taxpayers to determine whether they have properly reported any income attributable to virtual currencies.
Specifically, the IRS seeks all such personal data of all Coinbase users who conducted a transaction between 2013 and 2015. (Full disclosure: such records would include this reporter, who briefly possessed a small amount of bitcoins in 2014 and sold them as part of our Arscoin story.)
Utze also explained in the filing that “some taxpayers may deliberately use virtual currencies as a way to evade taxes.”
Coinbase, for its part, has not yet filed a formal legal response.
“Although Coinbase’s general practice is to cooperate with law enforcement, we are very concerned with the indiscriminate breadth of the government’s request,” Coinbase said in a statement sent by Coinbase spokesman David Farmer. “We take user privacy rights very seriously and our legal team is in the process of carefully examining the government’s petition.”
The IRS did not immediately respond to Ars’ request for comment.
The case has been assigned to US Magistrate Judge Jacqueline Scott Corley in San Francisco. No hearings have been scheduled yet.