IRS attempts to investigate Coinbase users for tax fraud

The Internal Revenue Service (IRS) is in the midst of a lawsuit against cryptocurrency provider Coinbase. The agency is attempting to gain information about those who use Coinbase, claiming that there is a high likelihood that these users are guilty of various tax crimes.

What is the basis for these allegations? The agency supports these allegations by pointing to the numbers. According to the IRS, they simple do not add up. As noted in a publication by Coindesk, a source that focuses on news relating to digital currency and also a part owner of Coinbase, the federal agency requested information about Coinbase users for 2013, 2014 and 2015. 

During this period, 500,000 people used virtual currency through Coinbase. Yet only 807, 893 and 802 users respectively reported gains or losses to the IRS for those years.

What is the issue? The IRS requested Coinbase provide information about users so the agency could look into whether or not these users are complying with internal revenue laws. Coinbase refused to comply with this request and is opposing enforcement efforts through the courts.

What will happen? The IRS responded to the refusal with a petition to the court to enforce the summons. This petition was delivered to the court September 1, 2017. If the courts ultimately force Coinbase to comply, various tax issues could be present. In addition to failing to report gains and losses to the IRS, foreign tax issues could also be present. In fact, it appears some banks even charge "International Transaction Fees" for the purchase of digital currency when the purchase is completed with a debit card.

What should digital currency users do? If you are concerned that your transactions are not in compliance with tax law, it is wise to seek legal counsel. An experienced attorney can review your situation and provide guidance, including tips on how to come into compliance with the least possible penalties.

No Comments

Leave a comment
Comment Information
  • ABA | American Bar Association
  • AV Preeminent | Peer Rated for Highest level of Professional Excellence | 2018
  • Virginia State Bar | 1938
  • Super lawyer | 2018
  • DC Bar
  • American Bar Academy of Attorney - CPAs | The power of the dual view
Email Our Team

Contact Us to Get Started Today

Located in the Washington, D.C area, we serve clients in the District of Columbia, Maryland and Northern Virginia, as well as across the country and overseas. For a free initial consultation, call 202-381-1261 or complete our brief online form.

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Six Convenient Office Locations in and around the DC Metropolitan Area

Washington, D.C.
1629 K Street NW, Suite 300
Washington, D.C. 20006

Phone: 202-618-1873
Fax: 888-235-8405
Map & Directions

Columbia Office
10440 Little Patuxent Parkway, Suite 300
Columbia, MD 21044

Phone: 410-497-5947
Fax: 888-235-8405
Map & Directions

Annapolis Office
888 Bestgate Road
Suite 400
Annapolis, MD 21401

Phone: 410-497-5947
Fax: 888-235-8405
Map & Directions

Fairfax Office
8280 Willow Oaks Corporate Drive
Suite 600
Fairfax, VA 22031

Phone: 703-621-7169
Fax: 888-235-8405
Map & Directions

Rockville Office
199 E. Montgomery Avenue
Suite 100
Rockville, MD 20850

Phone: 240-599-5009
Fax: 888-235-8405
Map & Directions

Baltimore Office
400 East Pratt Street
8th Floor
Baltimore, MD 21202

Phone: 443-743-3381
Fax: 888-235-8405
Map & Directions