Unreported Income from Coinbase? – The IRS is Looking For You

The IRS wants to identify every U.S. Coinbase User from 2013 to 2015

 

The Internal Revenue Service has asked a court in California to order Coinbase, a Bitcoin exchange, to hand over the identities of active U.s. users of its service from 2013 to 2015.

In a filing Thursday to the U.S. District Court in San Francisco, the IRS said it’s investigating whether virtual currency users failed to report income on transactions conducted in the Bitcoin virtual currency. It’s targeting Bitcoin because it’s the most commonly used of a number of digital currencies.

“Because the IRS considers virtual currencies to be property, United States taxpayers can realize a taxable gain from buying, selling, or trading in virtual currencies. There is a likelihood that United States taxpayers are failing to properly determine and report any taxable gain from such transactions,” it argued.

The IRS put taxpayers on notice in 2014 that they had to declare gains on virtual currency transactions. The agency says it has already found examples of attempted tax evasion using Coinbase accounts.

Two taxpayers, both of them companies, used separate accounts to conceal Bitcoin transactions as tech expenses on their tax returns, the IRS said. It also cited a third case involving a taxpayer who sent money to an offshore tax haven and brought it back into the U.S. in Bitcoin.

As a result, the IRS contends it’s likely other users are also evading taxes through such schemes.

In addition to customer details, the agency is also after transaction records, account statements, and records of payments made and processed for the users.

Unreported Income Received Coinbase

If you have received income from Coinbase in the past 3 years that you have not reported, you may be at risk.  If you have questions regarding your tax compliance in regards to virtual currency, now is the time to get your questions answered.  Please contact our office if you would like to schedule a free, no-obligation consultation to discuss your personal tax situation.