Sunday, January 29, 2023

Coinbase Notifies 13,000 Customers it Must Hand Over Their Records to IRS

Coinbase Notifies 13,000 Customers it Must Hand Over Their Records to IRS

Coinbase has sent notifications to approximately 13,000 of its older customers, cautioning them it will be forced to hand over certain personal and financial details to the U.S. Internal Revenue Service (IRS). Those concerned face IRS scrutiny over their cryptocurrency trades between 2013 and 2015, which will now also be personally identifiable.

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Hope You Declared Bitcoin Taxes to the IRS From 2013-15

Coinbase warned the recipients the data it must provide pertain to the tax years 2013, 2014 and 2015, advising them to consult with their own attorney or tax advisor if they had any concerns. The company is not able to provide that advice itself, it said.

Today’s IRS notifications shouldn’t come as a huge shock, though — They’re the result of a court order granted in the IRS’s favor against Coinbase in November 2017. Among the recipients are prominent early bitcoiners, including Andreas Antonopoulos:

Coinbase continues to paint the final judgment as a victory of sorts. In its defense, the company has fought the IRS in court at every stage since the federal tax agency initially demanded it hand over 500,000 personal records, in December 2016.

Coinbase managed to whittle that demand down to just 13,000 customer records with the most account activity, and limited the amount of associated financial/banking data the IRS may demand.

Antonopoulos himself defended Coinbase against criticisms in follow-up tweets, saying “Don’t be naive … this is one case where they fought hard and should be praised for it”. He added that he had personally fulfilled all his tax obligations pertaining to cryptocurrency investments.

Older Bitcoin Exchange Accounts vs. Today

Bitcoin holding and trading was very different just five years ago. In 2013, it was still possible to create trading accounts with bitcoin exchanges such as Coinbase with just an email address, real name optional.

tax taxesDepositing or withdrawing USD funds required linking a bank account which usually associated the exchange one to a real-life identity. Since then, however, most of the world’s exchanges have introduced full compliance with know-your-customer (KYC) and anti money laundering (AML) regulations, with ID requirements on par with banks themselves.

The IRS is looking particularly at bitcoin trading records from 2013-15. Of note, the BTC price in the first week of January 2013 was under $14 USD. It rose to over $1,100 USD by the end of that year, before slumping in a two-year bear market and sitting around $450 at the end of 2015.

Of course, if you held bitcoin around any of those times, the IRS may also be interested in what you held in 2017 when BTC almost hit $20,000. Today’s Coinbase notices serve as a public service announcement that cryptocurrency holders are obligated by law to declare gains and/or losses, and pay any taxes due.

Are you a Coinbase account holder? How do you feel about the latest developments? Let us know in the comments.

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