Bitcoin taxation in the USA: IRS gets judge’s permission to partially access Coinbase’s user databas
The American Internal Revenue Service (IRS) filed a case against the San Francisco-based Coinbase.
A federal court judge ruled that Coinbase is required to identify 14.355 account which have accounted for nearly 9 million Bitcoin transactions.
These transactions cover a period of 2 years, between 2013 and 2015
The ruling is the result of a long procedure before the court in which the IRS demanded that Coinbase provide detailed personal information on more than a million customer accounts.
During the proceedings, the IRS limited its demand to accounts that had conducted transactions worth 20.000 USD or more, because of privacy rights.
The court rejected Coinbase's argument that this request was an illegal imposition.
"The summons as narrowed by the Court serves the IRS's legitimate purpose of investigating Coinbase account holders who may not have paid federal taxes on their virtual currency profits" - US District Judge J. Corley.
The reason why the IRS started the procedure is the fact that only around 800 US citizens had declared Bitcoin-related losses or gains in 2015. This was obviously an incentive to investigate.
Although, the ruling only envisages Bitcoin related transactions and for now, other crypto-currencies are still exempt, this ruling might grow to be a landmark in the taxation of crypto-currencies and may set other proceedings in motion, not only in the USA but potentially in other parts of the world as well.
Whether Coinbase is going to appeal is still unclear, however they reacted satisfied to the limitation of the scope of the ruling.
Contact Vanbelle to for more information on the subject.