11 12 2017

Court Approves US Tax Agency's Request For Coinbase User Data

A US court has agreed that cryptocurrency trading platform Coinbase must share information about its customers with the Internal Revenue Service.

In November 2016 Coinbase launched a legal challenge to a summons issued by the IRS for details of all Coinbase transactions undertaken by US taxpayers between 2013 and 2015.

The IRS request was based on the gulf between the number of estimated US users of Coinbase and the number of taxpayers reporting cryptocurrency gains (taxable under a 2014 ruling).

There are believed to be around six million Coinbase customers, while reportedly just 800 taxpayers declared gains.

On November 29, 2017, the San Francisco District Court ruled that Coinbase must disclose identifying information concerning 14,355 customers, covering those users undertaking transactions worth USD20,000 or more in a single year between 2013 and 2015.

The currency platform said it had secured a "partial victory" in court, stating: "First, the Government vastly narrowed the scope of its summons. Thanks to Coinbase's efforts, more than 480,000 customers' records were preserved from disclosure. This is a 97 percent reduction in the number of customers impacted by this summons."

"Second, the quantity of data we must produce for the approximately 14,000 customers who remain in scope has been significantly reduced. In narrowing the scope of the summons, we are pleased that the Court acknowledged the privacy rights at stake in this matter."

In March 2014 the IRS issued a notice ruling that virtual currencies such as bitcoin are to be treated as property rather than as fiat currency for tax purposes.