A Judge Just Cleared the Way for the IRS to Seek Coinbase Customer Data

The IRS can serve bitcoin and ether exchange startup Coinbase with a summons for information about its users, a federal judge has ordered.

AccessTimeIconNov 30, 2016 at 10:41 p.m. UTC
Updated Sep 11, 2021 at 12:38 p.m. UTC

The IRS can now serve bitcoin and ether exchange startup Coinbase with a summons for information about its users, a federal judge ruled today.

In an order dated 30th November, Judge Jacqueline Scott Corley sided with a request filed earlier this month by the IRS as part of its bid to investigate alleged tax violations in the US pertaining or connected to digital currency use.

When reached for comment, Coinbase said that it expected the order and that it would release a formal statement.

The company later said:

"We are aware of, and expected, the court’s ex parte order today. We look forward to opposing the DOJ’s request in court after Coinbase is served with a subpoena. As we previously stated, we remain concerned with our US customers’ legitimate privacy rights in the face of the government’s sweeping request."

Following the issuance of the court order, the US government celebrated the development.

"Transactions in virtual currency are taxable just like those in any other property. The John Doe summons is a step designed to help the IRS ensure people doing business in the emerging economy are following the tax laws and meeting their responsibilities," IRS Commissioner John Koskinen said.

The IRS is seeking Coinbase user records from between 31st December, 2013 and 31st December, 2015. The startup said after the agency’s initial filing that it would oppose the effort.

Since mid-2015, the IRS has considered bitcoin and other digital currencies as kinds of taxable property. A recent report from the agency’s inspector general, however, blasted the IRS for a failure to develop a cohesive strategy for digital currency taxation – something that tax professionals have criticized it for as well.

This article has been updated with comment from Coinbase.

The full court order can be found below:

Order by CoinDesk on Scribd

Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Coinbase.

Image via Shutterstock

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