Coinbase Subpoena in the Wake of J5 – IRS Cryptocurrency Enforcement (2018)
Recently, the IRS was awarded a subpoena to inspect documents from Coinbase — in order to uncover cryptocurrency related income.
Specifically, the IRS is trying to determine:
- Which U.S. persons own cryptocurrency;
- Whether it is held on a U.S. or Foreign Exchange;
- Has the person sold or exchanged cryptocurrency;
- Was the income reported; and
- Was there an FBAR or FATCA Reporting requirement
Recently, we authored two Cryptocurrency articles:
- Cryptocurrency International Reporting
- Cryptocurrency U.S. Tax
The articles summarize the different types of potential Reporting and/or Tax liability a person may be subject to when they have cryptocurrency and have not properly reported it, or paid tax.
Typically, if you own the currency and it is located outside the United States (presuming it is not a personal wallet) there is a strong likelihood that the US. government wants to know about it. Likewise, if you have sold the cryptocurrency or otherwise exchanged it and receive a gain (which is typically taxed as capital gain) then the IRS wants to know about it.
IRS Joins J5
Recently, in July 2018 the IRS signed on to become a member of J5. The purpose is J5 is to uncover and enforce tax laws against individuals on a global scale involving unreported and undisclosed cryptocurrency.
In addition, the IRS has developed various tax enforcement groups designed to uncover worldwide cryptocurrency related crime; in other words, cryptocurrency has become a key enforcement priority.
Golding & Golding, A PLC
We have successfully represented clients in more than 1000 streamlined and voluntary disclosure submissions nationwide, and in over 70-different countries.
We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe.