Only 807 People Have Declared Bitcoin for Tax Purposes According to IRS
Only 807 people have declared Bitcoin for tax purposes, according to court documents filed by the IRS in San Francisco. If true, it is likely only a tiny percentage of virtual currency users have reported profits and losses in their annual income forms. Also read: Some Blockchain Tokens are Securities, Researchers Find Is the IRS […]
Only 807 people have declared Bitcoin for tax purposes, according to court documents filed by the IRS in San Francisco. If true, it is likely only a tiny percentage of virtual currency users have reported profits and losses in their annual income forms.
Is the IRS Warning Bitcoiners to Declare Bitcoin for 2017?
Filed in San Francisco federal court on Thursday, the new documents further shed light on the reason why IRS has asked Coinbase to hand over a broad range of customer data, including every customer account and detailed transaction records over a considerable period. Coinbase pledged to fight the request.
In a new affidavit from IRS agent David Utzke, he discovered that fewer than a thousand people filed a Form 8480 to account for a “property description likely related to bitcoin.”
The affidavit reads: “The IRS searched the MTRDB for Form 8949 data for tax years 2013 through 2015. I received the results of those searches. Those results reflect that in 2013, 807 individuals reported a transaction on Form 8949 using a property description likely related to bitcoin; in 2014, 893 individuals reported a transaction on Form 8949 using a property description likely related to bitcoin; and in 2015, 802 individuals reported a transaction on Form 8949 using a property description likely related to bitcoin.”
Coinbase said on Friday it has yet to hand over information. “Coinbase remains concerned with the indiscriminate and over broad scope of the government’s summons and we have produced no records under the summons,” wrote Coinbase lawyer, Juan Suarez.
According to a Fortune source, the IRS and Coinbase have been in talks over what information exactly the digital currency exchange would provide.
The IRS received approval from a California federal court last November – just in time for tax season – to serve a so-called John Doe summons on Coinbase to determine whether or not Bitcoin users are declaring their virtual currency.
Bitcoiners “may fail, or may have failed, to comply with one or more provisions of the internal revenue laws,” the IRS opined in 2015.
The IRS has therefore requested user records between 2013-2015 from Coinbase, including transaction history, IP addresses and transcripts with customer support. Many Bitcoiners, to be sure, complain the IRS never provided guidance, even though requested by academics and accountants several years ago.
All Users of Virtual Currency Are Evading Taxes?
Brian Armstrong, Coinbase founder and CEO, publicly rebuked the subpoena. “Asking for detailed transaction information on so many people, simply for using digital currency, is a violation of their privacy, and is not the best way for us to accomplish our mutual objective,” he wrote on Medium.
He added: “The IRS incorrectly implies that all users of virtual currency are evading taxes.”
Tax industry organizations have called for more clarity when it comes to Bitcoin taxes. “Creating a taxation framework that is stable and standardized, adaptable to digital trends, and maintains basic privacy standards is key to the broader development of the US bitcoin industry,” wrote the Americans for Tax Reform.
It could be, of course, that the IRS’ subpoena to Coinbase is their way of telling Bitcoiners in general that this is the year to start declaring.
Do you think the IRS is getting serious about Bitcoin taxes? Let us know in the comments below.
Images courtesy of Shutterstock, IRS, Coinbase
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