On Tuesday, a Federal court in California ordered the cryptocurrency exchange and wallet Coinbase to transfer Tax service of the USA (IRS) information about thousands of customers. The information requested must contain the names, dates of birth, addresses and activity of user accounts, which in 2013-2015 have made transactions with cryptocurrencies more than $ 20,000.
The court order marks the end of the proceedings, which lasted a whole year between the IRS and the operator Coinbase cryptocurrency. In November last year, the IRS demanded that Coinbase data of all the users of the exchange, but this met with resistance from customer service, who argued that the requirement is too wide. And then the tax concessions and requested data for only those users who had to deal with more than $20,000 in bitcoin in a certain period of time.
The full decision can be read here
According to the internal audit Coinbase from July 2017, from 14 000 users affected by this ruling, 6200 in the period 2013-2015 was also discussed on less than $ 60,000. That probably makes them not enough big fish.
The CEO of Coinbase Brian Armstrong (Armstrong Brain) in January, wrote in Medium:
«Request information about transactions of so many people who just use digital currency, is a violation of privacy and it is not the best way for us to fulfill our common goal.»
Under the law, U.S. citizens are required to pay tax on capital gains for cryptocurrency transactions. The IRS considers virtual currency property which is subject to Federal tax.
As the court ruling, more than 10,000 people conducted transactions with CryptoAPI worth more than $20,000, but only «800 to 900 taxpayers in the year submitted an e-mail with a description of the assets associated with the cryptocurrency in the period from 2013 to 2015». «This means that many Coinbase users might not report their cryptocurrency income», — stated in the decree.
In simple words, this court ruling is the IRS response to the possible evasion of taxes on income from cryptocurrency transactions. The actual resolution was put under investigation 14 000 users, only for the fact that they used new technology. Perhaps some will be able to avoid some portion of taxes due to the new bill, which was introduced in September this year and which exempts from tax any cryptocurrency transaction up to $ 600.