Coinbase officially entered the fray in a court case over its user records earlier this month – and now the IRS is fighting back.
In a 25th January court filing, lawyers for the US government argued that the San Francisco-based startup has no standing to intervene in the so-called "John Doe" summons case, through which the IRS is seeking bitcoin user records in a bid to identify potential tax cheats.
The case, which saw Coinbase customer Jeff Berns file his own intervention effort late last year, has drawn harsh criticism from digital currency advocates amid accusations of overreach.
Yet in its filing, the US tax agency is arguing that Coinbase doesn’t have a legal leg to stand on, citing the powers granted to it by Congress as part of its tax investigations.
The filing reads:
"The comprehensive statutory scheme governing the issuance and enforcement of Internal Revenue Service administrative summonses does not allow movants such as Mr. Berns or Coinbase to intervene in closed ex parte proceedings and does not create jurisdiction in this Court to grant them the relief they seek. Furthermore, Rule 24 of the Federal Rules of Civil Procedure does not give Coinbase the necessary standing to seek relief."
More specifically, government lawyers argued in their filing that the kind of case it filed in California would, in its view, preclude either Coinbase or Berns from attempting to intervene.
"The proceeding before the district court is ex parte, and the district court makes its determination whether the statutory requirements have been satisfied solely on the basis of the government’s petition and its supporting affidavits," the lawyers wrote.
The IRS first filed suit in November, seeking permission to serve Coinbase with a summons – a request Judge Jacqueline Scott Corley went on to grant. Berns filed his motion to intervene in December, a move the IRS quickly asked the court to rebuff.
Coinbase declined to comment when reached.
Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Coinbase.
The full court filing can be found below:
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