Crypto Taxes Time: IRS Has Coinbase In Its Sights
The Internal Revenue Service (IRS) is ramping up an investigation of the ways and means with which citizens of the USA hide their cash for tax season. Their primary target right this minute: Bitcoin and other cryptocurrencies. This investigation is currently aiming at Coinbase, the biggest brand in buying Bitcoin for USD – and a primary source for many millions of dollars in cash exchanged for code.
Tax evasion might not have been the primary aim for most people putting their cash into crypto over the past few years. There are different uses for the wide variety of blockchain-based technologies released of late. But the store of value that comes with a buy through Coinbase constitutes a need for investigation, as the IRS has just proven.
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A report with Bloomberg suggested the IRA formed a team all the way back in 2013 to begin investigating cryptocurrencies and virtual currencies. In the time between the team's formation and 2015, a legal summons was being prepared. That summons resulted in a legal battle with Coinbase that resulted in a ruling near the end of last year.
On November the 29th, 2017, a ruling was handed down that said Coinbase must hand over info on thousands of Coinbase user accounts. The case was titled "U.S. v. Coinbase, 17-01431, U.S. District Court, Northern District of California (San Francisco)" and documents related to the case can be found with the title in that order.
In the files for this case, several types of users are exempt from information summons. Those seemingly exempt from this investigation – according to the files we've gone over – include the following:
1. Users who only bought and held bitcoin during the 2013-15 period.
2. Users for which Coinbase filed Forms 1099-K during the 2013-15 period.
3. Users who did not make a single transaction of $20,000 or more during the period 2013-15.
If you're one of those sorts of people listed above, you should probably be fine. "That more than 14,000 Coinbase users have either bought, sold, sent or received at least $20,000 worth of Bitcoin in a given year suggests that many Coinbase users may not be reporting their Bitcoin gains," said U.S. Magistrate Judge Jacqueline Scott Corley. "The IRS has a legitimate interest in investigating these taxpayers."
Don Fort, chief of the IRS Criminal Investigation Division, is heading a new team of investigators focusing on international crimes. They'll be building cases against "tax evaders who use cryptocurrency" in the near future. "It's possible to use Bitcoin and other cryptocurrencies in the same fashion as foreign bank accounts," said Fort, "to facilitate tax evasion."
As it is with all other articles on SlashGear about Bitcoin and other cryptocurrencies, this article should not be considered financial, investment, or legal advice. All actions taken by the reader before, during, and after reading this article are their own. Be careful what you do, and be careful who you do it with!