Coinbase tells 13,000 customers their data will go to IRS
The bitcoin exchange notifies customers targeted by a tax-avoidance probe their data will go to the tax agency within three weeks.
Bitcoin exchange Coinbase says it will comply with a court order and surrender data to the IRS on approximately 13,000 customers targeted by a tax avoidance probe.
Coinbase said Friday it will hand over the data in the next 21 days, nearly three months after a US magistrate judge quashed its efforts to keep the Internal Revenue Service from seeing its customers' trading records. Judge Jacqueline Scott Corley in November ordered the exchange to supply the tax agency with the names, addresses and tax identification numbers of all users in the US who conducted at least one bitcoin transaction equivalent to at least $20,000 between 2012 and 2015.
"Coinbase fought this summons in court in an effort to protect its customers, and the industry as a whole, from unwarranted intrusions from the government," the company said in an email to affected customers, a copy of which was posted to its website Friday.
Bitcoin has captured the attention of investors and the public alike for its roller-coaster valuations in the past 12 months. After starting out in 2017 with a $1,000 per coin value, the cryptocurrency experienced a historic rise of more than 1,800 percent. It topped out at $19,783 in December before losing about half its value. It now trades at about $10,400, according to data from digital currency information site Coindesk.
The Justice Department said in a filing last year that an IRS agent had identified three cases in which cryptocurrencies were used to avoid paying taxes. Two of those cases involved Coinbase customers with millions of dollars in annual revenues, the filing alleged.
Coinbase, the largest bitcoin exchange in the US, had opposed the demand since 2016, arguing it was "extremely concerned with the indiscriminate breadth of the government's request."
Corley said in November that a "reporting gap" gave the IRS legitimate reason to demand the information.
"That only 800 to 900 taxpayers reported gains related to bitcoin in each of the relevant years and 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," Corley wrote in her judgment.
The exchange has posted an FAQ to give its customers more information on taxes related to digital currencies.
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