Coinbase Audit (IRS Bitcoin Audit, Examination & Investigation)
Within the last year, the Federal Court approved the issuance of a narrower IRS Subpoena and authorized a summons for the IRS to obtain copies of U.S. Account Holder information at Coinbase.
While at first, Coinbase puffed out their chest, and made it appear they would not turnover any information to the IRS – it turns out they were bluffing.
Now, ~14,000 account holders are at increased risk for an IRS Audit, examination or criminal investigation.
The IRS wants to know who has earnings and/or sales income from cryptocurrency.
In addition, the IRS wants to know who has their cryptocurrency held on a foreign exchange or account — which may require them to disclose the information on various international reporting forms (or risk being subject to IRS Fines, Penalties, and possibly worse).
Coinbase Provided the Following Update
On February 23rd, 2018, Coinbase notified a group of approximately 13,000 customers concerning a summons from the IRS regarding their Coinbase accounts.
Please refer to this document for the court’s judgment. The court ordered Coinbase to provide taxpayer ID, name, birth date, address, and historical transaction records for certain higher-transacting customers during the 2013-2015 period.
While Coinbase is unable to provide legal or tax advice, please refer to our Taxes FAQ for more information on taxes and digital currency.
What Does Coinbase’s Notice Mean?
It means that Coinbase will provide the IRS significant and substantial amounts of information regarding account holder information – sufficient to meet its burden under the subpoena – in order for the IRS to conduct detailed review, analysis and assessment of Taxpayer non-compliance.
What Can You Do?
If the IRS has not contacted you yet, you may have the ability to voluntarily disclose the bitcoin and significantly reduce your chance of IRS Audit, Examination or Investigation.
Golding & Golding: About our International Tax Law Firm
Golding & Golding specializes exclusively in international tax, and specifically IRS offshore disclosure and compliance.
Contact our firm today for assistance.