IRS Wants to Tax Your Bitcoin Gains: Orders Coinbase to Hand Over User Data
Coinbase told its customers on Friday that it plans to comply with a court order and hand over about 13,000 customers’ data to the IRS within 21 days. The IRS made the request back in November 2016, asking for the Coinbase records of all the people who bought bitcoin from 2013 to 2015 to seek out those who were evading cryptocurrency taxes. Anyone affected by the order should now have received an email from Coinbase to that effect.
Coinbase heavily resisted the summons. But ultimately, in November last year, the San Francisco court ruled Coinbase had to turn over identifying records for all users who have completed transactions of more than $20,000 through their accounts in a single year between 2013 and 2015. The data requested includes taxpayer IDs, names, dates of birth, addresses, and transaction records from that period.
In an email and on its website on Friday, Coinbase noted that it had tried: “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.”
It informed its 13,000 affected customers that the “court order requires us to produce information specific to your account,” but that the company could not provide legal or tax advice. So far, 2018 is shaping up to be the year that tax collectors get serious about bitcoin earnings, meaning that it’s a good time to be extra careful about compliance.
The latest IRS notice comes three weeks after Coinbase issued 1099-K tax forms, reminding customers to pay taxes on their crypto gains. (See also: Coinbase Issues 1099s: Reminds Users to Pay Taxes on Bitcoin Gains.)
Not surprisingly, many Coinbase customers are not pleased. Some feel that the decentralized and unregulated nature of cryptocurrencies make the investments immune to taxation, but alas, this apparently is not the case.
Many users were also furious that Coinbase had not given them more-advanced notice that they would have to file taxes on their crypto investment gains.