Coinbase Prepares to Fight IRS Summons With New Court Filing

An attempt by the IRS to obtain user records from digital currency exchange Coinbase just got more complicated.

AccessTimeIconJan 13, 2017 at 5:50 p.m. UTC
Updated Mar 6, 2023 at 3:15 p.m. UTC

UPDATE (13th January 21:30 BST): This article has been updated with comment from Coinbase.

Court documents filed in the District Court for the Northern District of California this week show that lawyers for the California-based startup have filed to officially intervene in the case.

The US Internal Revenue Service (IRS) launched its case in late November, seeking court approval for a subpoena that would allow it to obtain information on US users (and, in its eyes, potential tax cheats) who used the service between 2013 and 2015. A month later, Coinbase customer Jeffrey Berns moved to block the IRS, an effort the tax agency asked the court to invalidate.

Both Coinbase and Berns have said the tax agency is overreaching, though the startup hadn’t officially responded in court until now. When the case first emerged in November, representatives for the firm said they intended to protest the summons in court.

Coinbase lawyers wrote in the documents that, amidst the filings and counter-filings, the startup deserves to be heard in light of "an extraordinarily broad 'John Doe' summons". The startup is seeking both the chance to have say in the effort led by Berns as well as the IRS summons itself.

The company said:

"The motion to intervene is made on the grounds that Coinbase has an interest in the subject matter of this proceeding, and that disposition of the action may, as a practical matter, impair or impede Coinbase’s ability to protect that interest. Coinbase’s interest is not adequately represented by the existing parties."

In addition to seeking official entry into the case, Coinbase asked that a hearing on the motion filed by Berns be delayed until 30th March at the earliest. The reason: according to the startup, the outcome of the case could have ramifications for the company and its customer base, as well as the wider digital currency space.

"Accordingly, Coinbase would like the opportunity to be heard, at an appropriate time, on the substantive issues that Mr. Berns has raised to the IRS summons at issue," the company said.

When reached for comment, a representative for Coinbase told CoinDesk:

"Both the IRS and Mr. Berns have engaged in briefing both the procedural questions of Mr. Bern’s standing to intervene and also the substantive merits of the IRS’s subpoena. To ensure the court does not rule on the substantive merits of the IRS’s subpoena before they have heard from Coinbase and other companies in the industry, we have filed a motion to intervene and have asked the court to delay hearing on the substantive aspects of Mr. Bern’s motions for 75 days."

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

The full filing can be found below:

Coinbase by CoinDesk on Scribd

Image via Shutterstock


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