One of the world’s largest virtual currency exchanges, Coinbase, sent an official notice on February 23 to roughly 13,000 customers from its database saying it is legally required to pass their information on to the US Internal Revenue Service (IRS).
The IRS had initially asked US-based Coinbase in summer 2017 for detailed information on every one of its then over half a million users in order to track those who cheat on taxes. However, a Californian court ruled in November2017 that the total number would only include around 14,000 "high-transaction" users.
The platform now reports that the number was further reduced to 13,000 — the move Coinbase calls a "partial, but still significant, victory for Coinbase and its customers."
Got an email from @Coinbase that they'll be sharing information with the IRS. tbh, I expected it to be reported annually like any other financial institution.— Luke Dashjr (@LukeDashjr) 24 февраля 2018 г.
My only concern is that they might report the wrong thing… They don't know my cost basis or gains/losses.
On Friday, Coinbase told the roughly 13,000 affected users that the company would be disclosing to the tax authorities their taxpayer ID, name, birth date, address, and an overview of their transactions back in 2013-2015 within the next three weeks.
Should the users have any questions, Coinbase advises them to turn to lawyers for a professional consultation. Their website also has it that concerns may be addressed to Coinbase’s Taxes FAQ section.
It's just about time to welcome all @coinbase 's users to change their wallet's balance to #XVG #Vergecurrency in order to keep IRS sniffers out to mind their business. #wraithprotocol@vergecurrency @VergeEspanol @justinvendetta @VergeAddict @xvgmarketingeu @VergeLife pic.twitter.com/GkkNMZIFlu— ECUBITCOIN (@ECUBITCOIN) 24 февраля 2018 г.
The continuing legal feud between Coinbase and the US government started in November 2016, when the IRS filed a "John Doe summons" in the United States District Court for the Northern District of California, which legally binds bank account users to provide their tax data and places them on the hook until the summons is resolved within the statute of limitations period.
At that point, they suspected a number of owners of cryptocurrency accounts had evaded tax on over 20,000-dollar transactions.
On February 13, the personal finance service Credit Karma unveiled data showing that only 0.04 percent of their clients had reported cryptocurrencies on their federal tax returns in this tax season.