Can Coinbase Slay the IRS?
Coinbase, one of the largest U.S. exchanges, claims the IRS is impeding on privacy rights with its escalating probe into the records of thousands of account holders who trade bitcoin and other cryptocurrencies. In an effort to generate a windfall of tax revenue, the IRS seeks to make taxable events out of millions of unrecorded bitcoin transactions.
Coinbase’s response: See you in court.
“The IRS is engaging in a massive fishing expedition, hoping to find some evidence of tax avoidance so that the IRS may quiet its critics in Washington, D.C., and justify this misguided adventure,” Coinbase said. The IRS expedition targets 14,355 Coinbase users and 8.9 million transactions.
Right now, there is plenty of debate and confusion on whether crypto-to-crypto transactions are taxable events. The IRS guidelines are less than clear. If you invest in a coin and cash out for a profit in US dollars, you do owe the IRS. You also owe the IRS if you use your crypto to buy a sandwich. Seriously.
In this latest Coinbase showdown, which follows similar demands made against the exchange in July, the IRS wants records of users “with at least the equivalent of $20,000 in any one transaction type (buy, sell, send, or receive) in any one year during the 2013-15 period.” Traders who fall below the threshold are in the clear – for now.
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