Sunday, February 5, 2023

Coinbase Users Get Small Victory in Ongoing IRS Investigation

Coinbase Users Get Small Victory in Ongoing IRS Investigation

The Internal Revenue Service’s investigation of Coinbase is being re-evaluated. According to reports, the IRS investigation will no longer seek password and security settings for the impacted user accounts.

Also read: Craig Wright Supercomputing Firm Liquidated by Australian Tax Authorities

Coinbase logoAccording to Fortune, this doesn’t mean the IRS’s investigation into Coinbase and its user base is over. The IRS still has a keen interest in bitcoin holders’ profits, but is limiting the amount of personal account information it seeks — for now.

The IRS filed a summons in December of 2016 to audit user activity during the years of 2013-2015. It is estimated that would require information of over 500,000 user accounts creating millions of documents of associated records, which contain personal identifying information.

Coinbase and Congress on the Same Page

Coinbase directed Bitsonline to a  statement on 16th March 2016 and another statement on 18th Nov 2016, updating their stance on the investigation. The company also expressed their concern of the broad scope of the investigation in both statements.

“Although Coinbase’s general practice is to cooperate with properly targeted law enforcement inquiries, we are extremely concerned with the indiscriminate breadth of the government’s request.”

Congressman Sen. Orrin Hatch (R-UT) and colleagues issued a statement in support of the broadness of the investigation. Sen. Hatch and company also stated concerns that this investigation would be “intrusive to a large population of individuals.”

Coinbase wasn’t directly involved in this case. The law firm Berns Weiss is currently fighting on the behalf of John Doe accounts. The law firm has issued a motion to intervene. The motion raises important questions into the potential risks to user personal identifying information if such a broad investigation were to take place.

The IRS has failed to come up with a comprehensive digital currency tax strategy as noted by both the Congressional inquiry and the motion by Berns Weiss. This and other factors have caused for the IRS to pull back on exactly how much user data will be acquired in the audits.

Are you a Coinbase account holder, and does the IRS’ interest concern you? Let us know in the comments.

Images via Coinbase, NPR

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