On November 28, 2017, Magistrate Judge Jacqueline Scott Corley of the United States District Court for the Northern District of California granted in part and denied in part the Government’s petition to enforce the IRS summons served to Coinbase.
Coinbase was ordered to produce the following documents for accounts 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 to 2015 period:
- the taxpayer ID number,
- birth date,
- records of account activity including transaction logs or other records identifying the date, amount, and type of transaction (purchase/sale/exchange), the post transaction balance, and the names of counterparties to the transaction, and
- all periodic statements of account or invoices (or the equivalent).
It would appear that the $20,000 equivalent is calculated based on the price of bitcoin on the date(s) of the relevant transaction(s) rather than a fixed bitcoin exchange rate or today’s price. Presumably, if a customer purchased the $19,999.99 equivalent of bitcoin and held the asset indefinitely, then the summons would not apply to that customer.
“That only 800 to 900 taxpayers reported gains related to bitcoin in each of the relevant years and that more than 14,000 Coinbase users have either bought, sold, sent or received at least $20,000 worth of bitcoin in a given year suggests that many Coinbase users may not be reporting their bitcoin gains,” wrote Judge Corley. “The IRS has a legitimate interest in investigating these taxpayers,” she added.