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IRS goes after Coinbase to try and find tax evaders

By Greg S ยท 4 replies
Nov 9, 2017
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  1. With cryptocurrency showing extremely strong growth this year, it comes as no surprise that the IRS wants their share of the profits. The agency has requested information from Coinbase on over 14,000 users, accounting for 8.9 million transactions.

    Currently, bitcoin is worth over $7,100 and is up over $2,000 since last month. Bitcoin and all other cryptocurrencies are treated as a property asset according to the IRS. When value increases and an owner sells their digital currency for a profit, that income must be reported. According to the IRS, "US taxpayers, including Coinbase users, have made use of virtual currencies to avoid the reporting and payment of taxes."

    Coinbase and other groups involved in cryptocurrency trading are working to fight against the demand for customer info. The claims made against Coinbase have been called a threat to user privacy that could result in many more businesses being targeted to hand over customer data for review by the IRS. Coinbase believes the data request is too broad, calling the case a "massive fishing expedition" in hopes of finding a few people who may have cheated on their taxes.

    In this case, the IRS is only seeking information on users that have made transactions exceeding $20,000. Between 2013 and 2015, Coinbase reported over 500,000 users trading digital currencies. The IRS found that fewer than 900 users reported losses or gains on their trades during that time span.

    Coinbase will ask that the IRS demands for customer data are rejected today in "US v. Coinbase," to take place in US District Court in San Francisco.

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  2. Skidmarksdeluxe

    Skidmarksdeluxe TS Evangelist Posts: 8,647   +3,270

    I'll bet Coinbase customers are holding their breaths, thumbs etc. that they win the case but eventually the IRS will prevail, it's just a matter of time.
     
  3. davislane1

    davislane1 TS Grand Inquisitor Posts: 4,731   +3,749

    If you're trading bitcoin at a rate in excess of 20k per year, you should either...

    a.) have a tax pro doing your books.

    b.) not do so under U.S. jurisdiction (I.e. ex pats).
     
  4. Evernessince

    Evernessince TS Evangelist Posts: 1,919   +1,115

    20K a year actually isn't that much. Remember this is only for transactions, so if you buy and sell through coin the actual amount of money you are taking home is much less. The cost of the tax pro could easily exceed a tax professional. When you need additional sheets beyond a 1040, the cost starts going way up. Especially if you need a schedule C to disclose business profit and loss.
     
  5. Kibaruk

    Kibaruk TechSpot Paladin Posts: 3,270   +895

    How much is it when you are now hitting or passing the double digit income after selling your bitcoins? You are going to get taxed and at the very least a quarter out of it is going to papa-IRS. How do you feel about just sending them 5 grand, it isn't that much right?
     

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