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US Government Files Stern Response to Ongoing IRS-Coinbase Case

Not too long ago, the Bitcoin world learned of an ongoing court case involving the IRS and Coinbase. The US government agency sought to pull data from Coinbase users to ensure no one evaded taxes. Since this request was made, there have been a few updates on the matter, though Coinbase has not handed over any information to date. Earlier this week, the US government issued an official response related to this ongoing debacle.

US Government Won’t Change its Opinion

It is good to see the IRS-Coinbase court case remain ongoing. Some Bitcoin enthusiasts would rather see this matter ended once and for all, but that will not be happening anytime soon. Coinbase should be commended for its refusal to give up the information requested by the IRS. The demand for customer records has been a topic of substantial debate among cryptocurrency users for several months now. There is still no end in sight for this particular case either.

It seems the US government has suddenly decided to issue a response on this ongoing matter. The IRS summons initially issued to Coinbase has been somewhat controversial since day one. Demanding customer records between January 1, 2013, and December 31, 2015 is not out of the ordinary. However, lacking any specific explanation as to why these records are needed or the reason for which the IRS issued the summons, it was clear there would be some backlash sooner or later.

That pushback ultimately came from “John Doe 4”, who intervened in July of this year. Though the IRS summons has been publicly opposed for some time now, very little had been heard regarding the matter until a few days ago. The new comments issued by the US government are nothing out of the ordinary. They validate the IRS summons by referring to its ongoing investigation of cryptocurrencies. They cite a 2013 report claiming how “some taxpayers may use virtual currencies to evade taxes.”

The US government admits targeting Coinbase because of its popularity and growth. One IRS senior revenue agent claims the company was offering buy and sell trading functionality in dozens of countries, maintaining nearly 5 million wallets and offering wallet services in 190 countries. All of this information was taken from the website of Coinbase, which has always been rather transparent about the growth of the business. It appears this public information caused the IRS’s decision to investigate the company and its customers.

On paper, this explanation makes a lot of sense. However, the IRS claims there is a scope of records in which it is particularly interested. Its first request in the summons was rather broad and vague, which allowed for speculation to run rampant. Now that the search has been narrowed somewhat, the government agency still hopes to obtain the information it seeks. Additionally, the US government claims its “fishing expedition” involving Coinbase is not improper by any means. Opinions will always remain divided on that front, though.

Additionally, the US government commented that enforcing the summons would not introduce undue regulation for the Bitcoin sector. It also stated that Coinbase users have no constitutionally protected reasonable expectation of privacy related to the account information held by the company. Both of those statements are difficult to argue with, although it is expected there will be some form of official response from the affected parties in the coming weeks. This is not the last we have heard of the IRS-Coinbase debacle.