Coinbase Users Ask Court to Stop IRS Bitcoin Tax Hunt

Two unnamed Coinbase customers are seeking to stop the IRS from obtaining records on the digital currency exchange's user base, court records show.

AccessTimeIconMay 16, 2017 at 7:30 p.m. UTC
Updated Sep 11, 2021 at 1:19 p.m. UTC

Two unnamed Coinbase customers are seeking to stop the IRS from obtaining records on the digital currency exchange's user base.

On 15th May, law firm Berns Weiss LLP filed a motion seeking to quash – legal-speak for rendering invalid – the IRS summons, which it first submitted in November. At the time, the US tax agency sought records on Coinbase's bitcoin users in a bid to catch potential tax cheats (the IRS deemed bitcoin and other digital currencies a taxable form of property in 2014).

That effort sparked what has become a months-long legal battle that saw Berns Weiss intervene on behalf of its own managing partner, Jeffrey Berns, as well as Coinbase itself jumping into the fray.

The IRS ultimately asked another federal judge in March to enforce the summons, which Coinbase indicated at the time it intended to fight. Court records show that, on 4th May, Judge Jacqueline Corley ordered the IRS and Coinbase to propose a briefing schedule during which Coinbase is expected to mount its defense.

Berns Weiss submitted the new filing on behalf of two customers, referred in the documents as John Doe 1 and John Doe 2. The filing, according to the law firm, was spurred by the Corley's 4th May decision and "to insure that Coinbase's customers are represented in the proceeding and that the Court has the opportunity to consider their perspective".

Notably, according to a separate filing, the two customers in question are seeking anonymity. The reason, they argue, is to prevent the IRS from "attempting to moot Movants' motion by withdrawing its request that Coinbase provide Movants' records".

Attorney Lee Weiss said in a statement:

"We look forward to the opportunity to finally litigate the merits of the IRS Summons and for the Court to consider the grave privacy and financial risks to which Coinbase’s customers will be exposed if the summons is enforced in its current form."

A representative for Coinbase declined to comment when reached.

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

IRS image via Shutterstock

The full motion can be found below:


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