Coinbase asked to provide info from 2013-2015 to IRS. So far they are hedging.

[Searing]

  
 Well this is just peachy!
 
 https://www.cryptocoinsnews.com/irs-targeting-bitcoin-transaction-records-coinbase-users/

 Not a problem to me though. I've mined all my bitcoin/litecoin/etc since 2013 and have nice CPA and IRS Tax Forms as a business to show such.

 Then again if they do apply capital gains like land for EVERY transaction of BTC and or other crypto you were supposed to keep track of....I too am 'verily' screwed.

 (ie you bought 1 btc at beginning of the year and paid for something at the end of this year and now have to pay IRS capital gains of 20% on that 50 bucks you made)

  Well, then I too am screwed, if the fishing expedition in the above link pops that far.....ease of compliance has never been a good excuse for IRS noncompliance don't ya know.

  Please take the poll on your odds on how likely even some of the above may be.

  

[MadGamer]

I don't think we can say that this is wasn't excepted . We should except this from other services in the upcoming years too as Bitcoin is becoming known all over the world.
That's why I personally don't use centralized exchanges or at least those who asks for ID verification.

[calkob]

I think that more than likely they will eventually have to comply ?  thats why i think it best for companies to install methods that makes it impossible for even them to access personal info,  this is probably impossible in this case, but then in my opinion it is a flawed model,  roll on the decentralised exchanges, bitsquare is a good step in the right direction

[Searing]

I don't think we can say that this is wasn't excepted . We should except this from other services in the upcoming years too as Bitcoin is becoming known all over the world.
That's why I personally don't use centralized exchanges or at least those who asks for ID verification.

 What is unexpected is that the IRS even after the US Marshall's sales of BTC in bulk. Still will not change their own rules and still expect folk to pay 20% capital gains on
 every bit of BTC a person ever spent.

 Thus the BTC you got in 2013 for 250 if you spent on something this year for 750 you owe the IRS 100 bucks (20%) on the 500 buck gain.

 This gonna be quite the mess in that so far the IRS has refused to modify their stance on this, according to the Internal Gov't audit that set this all off and recommended changes

 that the IRS do more. Thus seems the IRS is just gonna double down and go with the 2013 rules. Fun times.

 Again I can show how I got mining most BTC/LTC mining and I've held most of my BTC.  But if you have traded for your BTC or piddled it away in small amounts without going through       coinbase ..this could be at the least very very annoying.

 How one could explain to the IRS that www.shapeshift.io is a normal way to change funds and/or zcash mining is would be a 'real' hoot

 IRS agent: you are mining an untraceable coin (zcash) why would you do that if you have honest intentions?

 You: It makes good money on my GPU rigs that I've reported thus to IRS.

 IRS agent: but you admit that there is no way to trace it once you decide to spend it.        J'accuse!

 Sheesh...what a mess because the IRS is 'set' on making lazy rules.

[AgentofCoin]

Yes, currently under the IRS's Advisory Opinion from 2014(?) a bitcoin is considered to be
property only for taxation purposes. So basically in the US, using bitcoin is like buying and
sell things with your stocks. It is pretty stupid, but is assigned as such so the IRS can tax it.

I think they can force Coinbase to open and provide past data on user's transactions to ensure
there is compliance with their opinion. So I assume Coinbase will lose in their defense.

[panju1]

I think they can force Coinbase to open and provide past data on user's transactions to ensure  there is compliance with their opinion. So I assume Coinbase will lose in their defense.

At least Coinbase is trying to fight the government. Large companies like Apple and Microsoft have locked horns with the government over issues of user privacy. Such actions by the government is precisely the reason why users flock to unregulated exchanges.

[Searing]

Yes, currently under the IRS's Advisory Opinion from 2014(?) a bitcoin is considered to be
property only for taxation purposes. So basically in the US, using bitcoin is like buying and
sell things with your stocks. It is pretty stupid, but is assigned as such so the IRS can tax it.

I think they can force Coinbase to open and provide past data on user's transactions to ensure
there is compliance with their opinion. So I assume Coinbase will lose in their defense.

 Yeah my point is ...maybe I blew like 8k thru coinbase....most of it mining and most of it went to BTC or mining equipment or stuff I can justify

 The catch is EACH individual bitcoin transaction that I moved for cash thru anything shapeshift/coinbase/folk on bitcointalk for the above equipment

 Will have to have its capital gains figured for EACH transaction. Me mostly holding and just using this for mining related stuff I'm not in too much hurt.

 But .that still is probably 80 to 100 transactions that need to be traced. What do you use to determine worth? coinbase prices/ other exchanges prices that

 can range 30 bucks both ways. How do you prove to the IRS you spent the stuff accordingly on bitcointalk, they ask, where is your receipt? IRS only accepts

 receipts so even if you are legit still screwed and I have not traded thru coinbase btc for cash etc like some and could probably muck my way through this

 most folk are just gonna toss up their hands and run for zcash I'd guess and go completely dark.

 I'm sure not gonna tell my CPA lady this. I'm just gonna muck along an hope if it comes to that my equipment declarations and the fact I've held most of my

 bitcoin is enough.

 edit: to clarify the bulk of my stuff has been justified to the IRS but not down to each individual btc transaction nor a receipt from say getting stuff on bitcointalk etc
        it could be real damper on crypto as a useful tool if they grind it down to every itty bitty transaction down to the penny. Generally I do what they want. But 
        that kinda detail imho would probably really upset the apple cart on crypto. Remember the 1984 guidelines are just that 'guidelines' ie 'best effort' if they change
        that interpetation to ALL ...it could be a real mess (end of rant ...not sure why I'm up in the air I likely could justify most of my stuff cause I hold but still annoying)

 

[AgentofCoin]

Yes, currently under the IRS's Advisory Opinion from 2014(?) a bitcoin is considered to be
property only for taxation purposes. So basically in the US, using bitcoin is like buying and
sell things with your stocks. It is pretty stupid, but is assigned as such so the IRS can tax it.

I think they can force Coinbase to open and provide past data on user's transactions to ensure
there is compliance with their opinion. So I assume Coinbase will lose in their defense.

 Yeah my point is ...maybe I blew like 8k thru coinbase....most of it mining and most of it went to BTC or mining equipment or stuff I can justify
 The catch is EACH individual bitcoin transaction that I moved for cash thru anything shapeshift/coinbase/folk on bitcointalk for the above equipment
 Will have to have its capital gains figured for EACH transaction. Me mostly holding and just using this for mining related stuff I'm not in too much hurt.
 But .that still is probably 80 to 100 transactions that need to be traced. What do you use to determine worth? coinbase prices/ other exchanges prices that
 can range 30 bucks both ways. How do you prove to the IRS you spent the stuff accordingly on bitcointalk, they ask, where is your receipt? IRS only accepts
 receipts so even if you are legit still screwed and I have not traded thru coinbase btc for cash etc like some and could probably muck my way through this
 most folk are just gonna toss up their hands and run for zcash I'd guess and go completely dark.
 I'm sure not gonna tell my CPA lady this. I'm just gonna muck along an hope if it comes to that my equipment declarations and the fact I've held most of my
 bitcoin is enough.

 edit: to clarify the bulk of my stuff has been justified to the IRS but not down to each individual btc transaction nor a receipt from say getting stuff on bitcointalk etc
        it could be real damper on crypto as a useful tool if they grind it down to every itty bitty transaction down to the penny. Generally I do what they want. But  
        that kinda detail imho would probably really upset the apple cart on crypto. Remember the 1984 guidelines are just that 'guidelines' ie 'best effort' if they change
        that interpetation to ALL ...it could be a real mess (end of rant ...not sure why I'm up in the air I likely could justify most of my stuff cause I hold but still annoying)

If you paid most of your taxes, I'd assume you will be fine.
I think the IRS is looking for people who have paid nothing and are gross offenders.
So I wouldn't worry if you owe $100 to $1000 to them, I think they are looking for
the people who owe multiple thousands and are purposefully not paying them.

I think they are on the hunt for tax dodgers.

[kiklo]

The subpoena is overly broad and legally should be denied because of it.
http://crimeinthesuites.com/governments-subpoena-power-not-infinite/
https://www.rcfp.org/2nd-cir-privilege-compendium/4-subpoena-not-overbroad-or-unduly-burdensome

The Second Circuit has stated that use of a subpoena for a fishing expedition is improper and blanket subpoenas are not permitted.

 

FYI:
https://blog.coinbase.com/2016/11/18/protecting-customer-privacy/

18 Nov 2016
Protecting Customer Privacy

Our customers may be aware that the U.S. government filed a civil petition yesterday in federal court seeking disclosure of all Coinbase U.S. customers' records over a three year period.
The government has not alleged any wrongdoing on the part of Coinbase and its petition is predicated on sweeping statements that taxpayers may use virtual currency to evade taxes.

Although Coinbase's general practice is to cooperate with properly targeted law enforcement inquiries, we are extremely concerned with the indiscriminate breadth of the government's request.
Our customers’ privacy rights are important to us and our legal team is in the process of examining the government's petition.
In its current form, we will oppose the government’s petition in court. We will continue to keep our customers informed on developments in this matter.

FYI2:
If they want Coinbase to report all BTC Transactions of US Citizens like a Stock Investing company would.
They have to pass a law that requires it, and we would receive a tax statement from coinbase at the end of the year,  but it can only be for the next tax year,
US Laws can not be retroactive.

https://en.wikipedia.org/wiki/Ex_post_facto_law

In the United States, the Congress is prohibited from passing ex post facto laws by clause 3 of Article I, Section 9 of the United States Constitution.
The states are prohibited from passing ex post facto laws by clause 1 of Article I, Section 10.
This is one of the relatively few restrictions that the United States Constitution made to both the power of the federal and state governments before the Fourteenth Amendment.

[xuan87]

Yes, currently under the IRS's Advisory Opinion from 2014(?) a bitcoin is considered to be
property only for taxation purposes. So basically in the US, using bitcoin is like buying and
sell things with your stocks. It is pretty stupid, but is assigned as such so the IRS can tax it.

I think they can force Coinbase to open and provide past data on user's transactions to ensure
there is compliance with their opinion. So I assume Coinbase will lose in their defense.

 Yeah my point is ...maybe I blew like 8k thru coinbase....most of it mining and most of it went to BTC or mining equipment or stuff I can justify
 The catch is EACH individual bitcoin transaction that I moved for cash thru anything shapeshift/coinbase/folk on bitcointalk for the above equipment
 Will have to have its capital gains figured for EACH transaction. Me mostly holding and just using this for mining related stuff I'm not in too much hurt.
 But .that still is probably 80 to 100 transactions that need to be traced. What do you use to determine worth? coinbase prices/ other exchanges prices that
 can range 30 bucks both ways. How do you prove to the IRS you spent the stuff accordingly on bitcointalk, they ask, where is your receipt? IRS only accepts
 receipts so even if you are legit still screwed and I have not traded thru coinbase btc for cash etc like some and could probably muck my way through this
 most folk are just gonna toss up their hands and run for zcash I'd guess and go completely dark.
 I'm sure not gonna tell my CPA lady this. I'm just gonna muck along an hope if it comes to that my equipment declarations and the fact I've held most of my
 bitcoin is enough.

 edit: to clarify the bulk of my stuff has been justified to the IRS but not down to each individual btc transaction nor a receipt from say getting stuff on bitcointalk etc
        it could be real damper on crypto as a useful tool if they grind it down to every itty bitty transaction down to the penny. Generally I do what they want. But  
        that kinda detail imho would probably really upset the apple cart on crypto. Remember the 1984 guidelines are just that 'guidelines' ie 'best effort' if they change
        that interpetation to ALL ...it could be a real mess (end of rant ...not sure why I'm up in the air I likely could justify most of my stuff cause I hold but still annoying)

If you paid most of your taxes, I'd assume you will be fine.
I think the IRS is looking for people who have paid nothing and are gross offenders.
So I wouldn't worry if you owe $100 to $1000 to them, I think they are looking for
the people who owe multiple thousands and are purposefully not paying them.

I think they are on the hunt for tax dodgers.

yeah it's true, most of the people is enjoying bitcoin without need to pay any tax so the government is anxious and want to look for extra income from bitcoin,  but i still wonder how can they know whose address they are tracking, government is looking for a chance to control bitcoin transaction, in the end government will try to interfere all of our transaction and bitcoin saving

[QuestionAuthority]

In one post after another for years I've told people never to use a US based exchange or Bitcoin business. Maybe now people will listen. There's only one option available to citizens of the totalitarian states of america for selling bitcoins - localbitcoins.

Almost everything you own and use for personal or investment purposes is a capital asset. Examples include a home, personal-use items like household furnishings, and stocks or bonds held as investments. When you sell a capital asset, the difference between the adjusted basis in the asset and the amount you realized from the sale is a capital gain or a capital loss. Generally, an asset's basis is its cost to the owner, but if you received the asset as a gift or inheritance, refer to Topic 703 for information about your basis. For information on calculating adjusted basis, refer to Publication 551, Basis of Assets. You have a capital gain if you sell the asset for more than your adjusted basis. You have a capital loss if you sell the asset for less than your adjusted basis. Losses from the sale of personal-use property, such as your home or car, are not tax deductible. If you have a taxable capital gain, you may be required to make estimated tax payments. Refer to Publication 505, Tax Withholding and Estimated Tax for additional information.

If your capital losses exceed your capital gains, the amount of the excess loss that you can claim on line 13 of Form 1040 to lower your income is the lesser of $3,000, ($1,500 if you are married filing separately) or your total net loss shown on line 16 of the Form 1040, Schedule D (PDF), Capital Gains and Losses. If your net capital loss is more than this limit, you can carry the loss forward to later years. You may use the Capital Loss Carryover Worksheet found in Publication 550, Investment Income and Expenses, or in the Form 1040, Schedule D Instructions (PDF), to figure the amount you can carry forward. Taxpayers with significant investment income may be subject to the Net Investment Income Tax (NIIT). For additional information on the NIIT, see Topic 559.

[amacar2]

I think they can force Coinbase to open and provide past data on user's transactions to ensure
there is compliance with their opinion. So I assume Coinbase will lose in their defense.

So whatever coinbase claim about protecting user privacy will be just some bullshit if they provide all the personal info required by IRS along with related bitcoin transactions.
That's why better to use desktop clients or run own full bitcoin node.

[Milkduds]

This is not a shocker at all,Coinbase has gone out of its way to be in line with government and the next step will most likely be a audit of customers to see who holds what. Site should have been run off in the early days but people had to use it.
Always thought it was funny that people that when the lottery or money on game shows lost close to half the amount in taxes in the States.
The warning bells should have been going off for all Americans long before this and this is why people like to stay anonymous. Just drives that issue home once again for those of us that are not wanting to bend over for government regulation.

[MingLee]

Used to use them, but stopped somewhere close to 6 months ago, and I'm kinda glad about it now. Thought it would be a good intermediary account but I guess there really aren't many good things about their services anymore.

Probably have some of my data caught up in there, but I might get lucky since I never used their exchange services.

[karawantbtc]

Who didnt see this coming?! The IRS is going to come down hard to make examples of people. Which is going to make a bunch of people angry and then you will see "tax protestors" everywhere.  The IRS tax revenues are going to plummet!  Give it a couple of years.

[RGBKey]

Honestly you should have seen this coming if you were using Coinbase, they have always been 100% on the side of compliance.

[Searing]

Honestly you should have seen this coming if you were using Coinbase, they have always been 100% on the side of compliance.

I guess my point on this was not the compliance, but the 'fishing expedition' in other words they want a blanket of ALL bitcoin users. You are
guilty by the fact of using BTC of being not in IRS compliance as an assumption...thus BTC to USD is the trigger for us to look at you in mass.

In most normal cases they ask if 'so and so' they could get info. Not everyone who has ever cashed out BTC to USD!

(evil we are BTC users....) In other words, the Inspector General's office told the IRS they are not doing enough to regulate BTC and this is their response...ie LAZY

we will just ask for ALL info on ALL BTC users that xfer BTC to cash on Coinbase and will assume ALL are guilty unless they can prove otherwise.

IRS as usual 'acting out' because of budget cuts and not enough folk. So lets try this.

Anyway seems like the attempt anyway IMHO.

[RGBKey]

Honestly you should have seen this coming if you were using Coinbase, they have always been 100% on the side of compliance.

-snip-

Has stuff like this been proven though? Has anyone been targeted by the IRS for something like small amounts of BTC -> USD, or for no transactions at all?

[almightyruler]

In one post after another for years I've told people never to use a US based exchange or Bitcoin business.

They're not all bad. The guy at Cryptsy was nice enough to shred (destroy) the customer database before he fled to China.

[Searing]

Honestly you should have seen this coming if you were using Coinbase, they have always been 100% on the side of compliance.

-snip-

Has stuff like this been proven though? Has anyone been targeted by the IRS for something like small amounts of BTC -> USD, or for no transactions at all?

Not that I know of ..but the IRS guidelines are specifically written as such

https://www.irs.gov/uac/newsroom/irs-virtual-currency-guidance


ie you trade btc at 1 btc in a speculation manner and you double your speculation to say 2 BTC if not held for 1 year and 1 day 40% capital gains or 20% if held more then
1 year like Land.

ie you make btc from mining you pay 25% tax as income...ie the IRS does not like you making money out of thin air..thus want their cut as income

you hold BTC and do zip with it ...and it goes up you pay nothing.....

you make 10 BTC mining and hold it and price is 450 and you sell it for 750 at end of the year you pay 40% capital gains like land on the 300 buck difference

you can take off 100% off of your gross income mining in equipment for BTC (ie computers) as a business.

stuff like that..all this makes little sense in that, the Marshall's office ignored IRS guidelines when they did the massive BTC sales off silkroad etc Sold it as bulk

But anyway comes down to this if you trade/speculate btc and use coinbase you are royally screwed

If you mine BTC or mine LTC and convert to BTC ...all crypto is treated the same you sell it the day you get it for $$$ no capital gains

if you hold it for 1 month say and it gains 10% in value before you say use it to pay your mining electric you pay the capital gains of 40% on that increase because less then 1 year 1 day.

all this stuff is a pain for piddle factor...thus why the General Accounting Office got on IRS that its guidelines make no sense here recently....which likely set off the coinbase action

thus IRS response is gonna try to enforce the above anyway...in most cases, folk are gonna ignore it as too much a pain in the ass to treat every BTC transaction in this manner

....are you really gonna keep track of ever micro transaction of btc for coffee in that manner?

On the other hand, the IRS likely is gonna be really really picky on you mining crypto ....so that I've always kept track of...

But to sum up

The IRS IS asking Coinbase for the database of ALL BTC users on coinbase who have EVER xfered BTC to Cash....NOT just whales..NOT just miners...every damn
transaction......then when they get that info they are gonna randomly fish out info after the fact.

So the assumption is if you are the IRS and see folk using BTC  on coinbase they are guilty of likely IRS fraud....just for using BTC as a rationale for this blanket attempt

So imho IRS is p/o'd about the General Accounting Office saying they have no clear method of watching crypto ..so they dusted off the 2014 IRS guidelines 'impractical' thou
the General Accounting Office said (unworkable) anyway just so show they are doing something from the GAO blast on realistic regulation of crypto.

Whatever I hold mostly..and probably can kill a day messing with my BTC to eguip transactions enough for a flow chart of where my BTC went and the puny
capital gains and maybe losses in such xfers from my mining to equipment or electric...ie it is managable in my case because I mostly hold BTC.

pain in the butt it may be but nothing like a guy who speculates on BTC ......every transaction ever made you are supposed to keep track of

or

the user who really does use btc for coffee in a day to day transaction....

my only issue is if the IRS said they needed receipts from the stuff I got off bitcointalk in equipment..that would be a loss.....IRS would not understand sending BTC to someone
with an alias and getting equipment that way w/o a paper reciept...that would never fly...they would simply look confused such a notion would even exist.

So if that ever happens would just have to eat the BTC action to the IRS on that

Whatever.......know folk in Solar Equip that get audited often (again making $$$ out of the air) same with BTC or LTC mining....the IRS is not big on that kinda thing .thus extra
likely pain in the butt enforcement is gonna dump on more then just coinbase....