Senior Republicans Weigh in on IRS v. Coinbase Dispute

Crime, FinTech, Investing, News, Regulation | May 22, 2017 By:

Senior Republicans in Congress have demanded that the Internal Revenue Service  explain its strategy for enforcing tax payments on digital currency by June 7.

In a letter dated May 17, the chairmen of the House of Representatives Ways and Means Committee (Kevin Brady), Senate Committee on Finance (Orrin Hatch) and House Ways and Means Oversight Committee (Vern Buchanan) “strongly” questioned if the IRS had a reasonable basis for its demand that Coinbase turn over account records on its cryptocurrency exchange customers. That case, which began last year, is currently before the federal courts.

“We strongly question whether the IRS has actually established a reasonable basis to support the mass production of records for half of a million people, the vast majority of whom appear to not be conducting the volume of transactions needed to report them to the IRS,” said the letter. “Based on the information before us, this summons seems overly broad, extremely burdensome, and highly intrusive to a large population of individuals. The IRS’s actions in this case also set a dangerous precedent for companies facilitating virtual currency transactions that could be subject to a similar summons.  “

The letter went on to say that demanding the records seems “overly broad, extremely burdensome, and highly intrusive to a large population of individuals.”

Only 802 Coinbase users have filed a tax report on their cryptocurrency gains and losses for 2015, per the IRS. They claim that shows a substantial number of people are ignoring the requirement to report capital gains on their holdings. Bitcoin is exploding in value, and any profit-taking or exchanges for merchandise would require a tax on the capital gain.