The US Internal Revenue Service demanded the US District Court of Northern California to reject a Coinbase defender’s motion opposing the taxmen getting access to users’ data.
The IRS’ move is a response to the motion of the attorney Jeffrey K. Berns intended to stop the Internal Revenue Service’s subpoena for Coinbase. The fiscal agency aims to oblige the bitcoin wallet provider to disclose transaction information and personal data of its clients.
The IRS insists that its request concerns only unidentified customers of Coinbase, whereas, in his motion filed on 13 December, Berns identified himself as a Coinbase user. On this ground, the taxmen claim their request has nothing to do with Berns personally, therefore, his filing must be dismissed.
On 1 December, the US District Court of Northern California approved the IRS’ claim to access all Coinbase transactions for 2014 and 2015.
“Based upon a review of the Petition and supporting documents, the Court has determined that the “John Doe” summons to Coinbase, Inc. relates to the investigation of an ascertainable group or class of persons, that there is a reasonable basis for believing that such group or class of persons has failed or may have failed to comply with any provision of any internal revenue laws, and that the information sought to be obtained from the examination of the records or testimony (and the identities of the persons with the respect to whose liability the summons is issued) are not readily available from the sources,” the court order reads.
The information concerning internal transactions between Coinbase accounts is accessible in the bitcoin public ledger. However, the system provides no data to identify physical wallet owners – these details are only available to Coinbase.
“Because transactions in virtual currency can be difficult to trace and many virtual economies and currencies offer some level of anonymity, taxpayers may use them to hide taxable income or may not be properly reporting their taxable income from their transactions in virtual currencies,” the recent IRS filing reads.
Coinbase, in turn, believes that disclosure of this information would violate their US customers’ legitimate privacy rights.