Coinbase has grown to become one of the industry’s most well known and well-established names over the last half decade and for good reason – it’s wallet and exchange services are some of the most trustworthy and most well respected in the space. While it’s a darling of the industry, however, at least from the point of view of the majority, outsiders (and, in particular, lawmakers) aren’t quite as keen on the company as they otherwise might be.
Over the past couple of years, there has been a long ongoing (and very well documented) battle between Coinbase and the US Internal Revenue Service (IRS) that many readers may already be aware of. Basically, the IRS thinks that people in the US are using Coinbase to avoid paying taxes. To a large degree, it’s warranted in its suspicions. According to reports that hit press a year or so ago, only a tiny percentage of account holders with Coinbase actually filed tax returns and did so properly (i.e. declaring their holdings and paying the appropriate tax on them).
Coinbase, however, argues that the IRS has no business trying to get at private information of individuals when there’s no evidence (at least on a person to person basis) that there’s been any wrongdoing.
Well, the situation has once again come to a head.
On Thursday last week, and at the conclusion of a hearing, U.S. Magistrate Judge, Jacqueline Scott Corley, who is presiding over a case between the U.S and Coinbase (U.S. v. Coinbase 17-01431), had this to say:
“It’s legitimate for them to investigate whether people are making money on their bitcoin purchases and paying taxes on any gains… I have to give tremendous discretion to the agency as to how they investigate.”
The IRS says this about the matter:
“U.S. taxpayers, including Coinbase users, have made use of virtual currencies to avoid the reporting and payment of taxes… [we] need to gain some degree of visibility into a space where it is already necessarily moving about somewhat in the dark.”
Finally, here’s what Coinbase says:
“We’re in this tussle with them (the IRS) where they are improperly searching for private information of our customers with no evidence of wrongdoing.”
Image courtesy of GotCredit via Flickr