[2018-01-04] Coinbase to Customers: Don't Forget to Pay Taxes on Bitcoin Gains

[cybersofts]

Coinbase to Customers: Don't Forget to Pay Taxes on Bitcoin Gains



Exchange and wallet service provider Coinbase appears to be taking early steps to remind customers about their upcoming tax obligations.

With the U.S. tax year having ended on Dec. 31, the company's users are now faced with a banner placed at the top of their dashboard, stating "Please remember to pay your taxes," and linking to the website's newly updated tax FAQ page.

The FAQ points out that Coinbase "cannot provide legal or tax advice," but links to Internal Revenue Service (IRS) guidelines on how to report and pay taxes relating to crypto trading. A similar banner is also now visible for users in the EU as well.



It also adds that users can refer to their account transaction histories in order to calculate their gains and losses. Coinbase further offers a Cost Basis for Taxes report (currently in beta) to assist with the process, the FAQ states.

Notably, the move to raise awareness of users' tax liabilities comes soon after Coinbase concluded a lengthy court battle with the IRS over the tax agency's request that the firm hand over records on thousands of customers.

The San-Francisco district court ruled in late November that Coinbase must hand over user accounts at the exchange that bought, sold, sent or received sums of $20,000 and higher between 2013 and 2015.

The dispute over user records had been ongoing since November 2016, when the IRS had originally requested 480,000 customer accounts – a number that was slashed to over 14,000 in the final ruling, prompting Coinbase to claim the case a "partial victory."


Source: https://www.coindesk.com/coinbase-warns-users-to-pay-their-bitcoin-taxes/

[Taki]

Well, they did their job - informed users to not forget to pay taxes from their crypto earnings, and it's not in their cognisance to follow will an individual pay it or not, so they are free from response. Smart step. Other exchangers and platforms will follow it I guess.

[1Referee]

It's a pretty understandable move. Coinbase is not just a strict platform in its entirity, but the government itself is closely following them as largest economical entity in this market. It's basically them being kept under very close observation in a more severe form than any other service that this market counts. If I was completely verified with all my personal detals there, I would definitely not risk getting a penalty for not paying due taxes due to the history of Coinbase exchanging user data to the IRS. It's not worth the penalty in the end, because it will strike way harder than when you would have paid tax through the regular way.

[richardsNY]

If I was completely verified with all my personal detals there, I would definitely not risk getting a penalty for not paying due taxes due to the history of Coinbase exchanging user data to the IRS. It's not worth the penalty in the end, because it will strike way harder than when you would have paid tax through the regular way.

Doesn't that directly apply to all exchanges where we are verified at? I get it that the big boy amongst all exchanges is being seen as the easiest target for authorities, but in the same way we should fear other exchanges to do the same as Coinbase did. Coinbase openly shared everything regarding the authorities, but what if an exchange as Bitstamp or Gemini is experiencing the same, but then without it being publicly known? I have never thought about it earlier, but I wonder whether exchanges are willing, or even are allowed to 'destroy' our  accounts including our personal information and ID scans and such, when we ask for it....

[1Referee]

Doesn't that directly apply to all exchanges where we are verified at? I get it that the big boy amongst all exchanges is being seen as the easiest target for authorities, but in the same way we should fear other exchanges to do the same as Coinbase did. Coinbase openly shared everything regarding the authorities, but what if an exchange as Bitstamp or Gemini is experiencing the same, but then without it being publicly known?

It surely does, so that means we all risk penalties in case the government has indeed forced a behind the scenes 'cooperation' with other exchanges. However, I do believe that an exchange will try to bring it up to the court initially, mainly because of the fact that they know if there is some sort of governmental cooperation, it will be similar for them to break their own terms, and directly put their traders in danger. I expect things to at that point to play out in a similar fashion as how things went for Coinbase. Governments look for big fishes, so they will probably compromise with big account holders there, and ignore the smaller fishes, because that would make the most sense.

[error08]

Paying taxes for capital gains is better than get penalty in the end of the day as people don't lose anything compared to their initial capital to buy cryptocurrencies. People can't avoid IRS as long as they ever use exchanges to trade cryptocurrencies or just buy it, unless for those who buy bitcoin on peer-to-peer or OTC trading outside the exchanges platform.

[darkangel11]

Paying taxes for capital gains is better than get penalty in the end of the day as people don't lose anything compared to their initial capital to buy cryptocurrencies. People can't avoid IRS as long as they ever use exchanges to trade cryptocurrencies or just buy it, unless for those who buy bitcoin on peer-to-peer or OTC trading outside the exchanges platform.

That's what they want you to believe. That it's unavoidable and that they'll get you eventually. If you obey your government you're making their job much easier. Think of it as the plantation owner and his slaves. If they are all scared you can focus on other things.

The San-Francisco district court ruled in late November that Coinbase must hand over user accounts at the exchange that bought, sold, sent or received sums of $20,000 and higher between 2013 and 2015.

The dispute over user records had been ongoing since November 2016, when the IRS had originally requested 480,000 customer accounts – a number that was slashed to over 14,000 in the final ruling, prompting Coinbase to claim the case a "partial victory."

2 interesting things caught my eye:
1. Only 14k people had traded over $20k in the given period.
2. They've given up personal details of people who bought BTC, not only sold it for fiat, which means they now hold the addresses and IDs of their owners and can follow the money. If those coins end up on another wallet they will knock on the original owner's door asking about the deal to get the other guy. If the US is showing the world how it's done we should really start moving to some anonymous altcoins and exchanges because it doesn't look good.

[iamTom123]

Well, they did their job - informed users to not forget to pay taxes from their crypto earnings, and it's not in their cognisance to follow will an individual pay it or not, so they are free from response. Smart step. Other exchangers and platforms will follow it I guess.

The obligation to file and pay appropriate taxes is the burden on the part of the taxpayer and not with Coinbase but to convey the idea that it is fully cooperating with the government (and it has no choice but to do so) it is now issuing such a message to its many members. We know that the IRS is always looking for ways to tax anyone on anything that is taxable and they will use available means to make all taxpayers under its jurisdiction to pay what is due to the government according to existing tax codes. Yes, I am sure that other exchanges will be following the same thing in warning members that they should be paying their tax otherwise the arms and eyes of the law will be upon them. This is the tax and death kind of story. I am still glad that am not based in USA as I am right now enjoying my tax-free Bitcoin adventure. Please don't report me to my government.

[LuanX3]

Well you really should, since that is how things should really be since the beginning. Who said that bitcoins are not taxable? Any income on anything are actually taxable, not sure where the notion came from that bitcoins are not supposed to be taxed. Anything you earn is actually taxable by your government, but the problem is the governments do not have a clear way to determine whether a person has bitcoins or he has sold a significant amount of it and profited from the sale.