Coinbase has suffered a major blow after being ordered to give Internal Revenue Service (IRS) the data records for its users who traded more than $20,000.
Coinbase has suffered a major blow after being ordered to give Internal Revenue Service (IRS) the data records for its users who traded more than $20,000. Majority of the digital currencies operates in the virtual world that is beyond the federal regulators reach. However, U.S tax authority has started to pay more attention to the whole bitcoin thing.
On Wednesday, a California federal judge ordered Coinbase to supply IRS with all identifying information on its users who traded more than $20,000 annually between the year 2013 and 2015. This was after noticing disparities on the tax return claiming gains that did not match up with the increasing popularity of the digital currencies such as bitcoin, which are used as investment vehicles. IRS had asked Coinbase to produce a broad data information about their users’ transactions. However, Coinbase pushed back this request and now the court has reached a compromise, which the company has said its a partial victory.
Coinbase has admitted that the Summons requests for data information touching its 8.9 million transactions and more than 14,000 Coinbase account holders. The Narrowed Summons was issued after the court noted that between 800 and 900 taxpayers made gains related to bitcoin annually for the period 2013-2015, while 14,355 Coinbase users are said to have either sold, bought, sent or received a minimum of $20,000 in a given year but did not report their bitcoin gains.
While this new development may not go down well with many cryptocurrency users who enjoy the decentralization and privacy that comes with digital currencies, Coinbase has succeeded in narrowing down the government’s initial request to be given transaction information for all users from 2013-2015, to a smaller number of high-value users. IRS had requested 9 different categories of user data that included transaction logs, user profiles, records of payments, invoice statements, correspondence between users, just to mention a few.
The court rejected many of those requests and narrowed down to name, user ID number, address, date of birth, account statements and transaction logs. These users data will only apply to those who made transaction above $20,000, who are far fewer compared to initial IRS request.