Various outlets have reported that the IRS has scored a big victory over Bitcoin exchange, Coinbase, over the matter of access to identifying records for more than 14,000 of the service’s highest rollers. In a recent court decision almost a year after the IRS originally filed the order, a US district court ruled in the IRS’ favor.
That means that everyone who made any transaction on Coinbase exceeding $20,000 in value between 2013 and 2015 is now or will soon be known to the IRS, which believes that some Bitcoin users aren’t accurately reporting money made through the platform. According to Coinbase itself, that equals to 8.9 million separate transactions made by 14,355 distinct users, whose names, birth dates, addresses, and other data are now open to IRS scrutiny.
Even though the court decision was a technical victory for the IRS, a Coinbase blog post by the company’s director of business operations, David Farmer, after the decision celebrated it as an “unprecedented victory for the industry.” because the scope of the records in question is much lower than what the IRS originally sought. At first, the IRS wanted records of all the Coinbase transactions between 2013 and 2015, and the ultimate ruling regarding transactions of $20,000 or more is a decrease of about 97 percent of what the IRS tried to get at first. Here’s another excerpt:
“The government’s own lawyers noted at the hearing that the IRS is not accustomed to having to fight for records in this context, and most companies just turn records over without going to court.”
Farmer went on to reassure Coinbase’s possibly alarmed customers that, despite the court’s decision, the company’s disclosure to the IRS was still in the uncertain future: “In the event that we ultimately produce the documents under this Court order, we intend to notify impacted users in advance of any disclosure.”
So it would appear that both the IRS and Coinbase can look at the decision as a partial win.