Coinbase and the IRS. What is the possbile outcome?

[Wind_FURY]

I just read an article at coindesk.com entitled "What the IRS Summons Will Mean for Coinbase Users", located here.

It mentioned that (I will copy/paste below)

"The situation is reminiscent of the John Doe summons which the IRS issued in 2009 during the UBS Bank offshore banking scandal.

UBS had set up Swiss bank accounts to hide hundreds of millions of dollars belonging to US citizens. Swiss banking secrecy cracked, UBS sent a list of names to the IRS, and individuals were prosecuted.

UBS paid a fine of $780m and some Americans with UBS bank accounts paid fines in the millions and went to prison."

If the same were to happen to Coinbase then I would say they better close now or suffer the consequences if they continue on under the scrutiny of the IRS and risking the fact that Brain Armstrong and the rest could go to jail. So is this the beginning of Coinbase's demise or do they have a case to fight against the IRS?

[error08]

I just read an article at coindesk.com entitled "What the IRS Summons Will Mean for Coinbase Users", located here.

If the same were to happen to Coinbase then I would say they better close now or suffer the consequences if they continue on under the scrutiny of the IRS and risking the fact that Brain Armstrong and the rest could go to jail. So is this the beginning of Coinbase's demise or do they have a case to fight against the IRS?

Why coinbase should close?
"The John Doe summons authorized on 30th November demands that Coinbase provide complete transaction records for all users between 30th December 2013 and 30th December 2015. If the IRS succeeds in forcing Coinbase to turn over their records, this would be a massive invasion of privacy and guilt by association"

 I think it better if they didn't start their business in US in the first place due to many regulations that could lead to jail, or better move out to somewhere that doesn't has such regulation.
"The IRS has begun an investigation of United States persons who conducted transactions in a convertible virtual currency during 2013 to 2015. Bitcoin is a convertible virtual currency. The purpose of the investigation is to determine the correct taxes due for those US persons"

It's all about taxes.

[pooya87]

~ to hide hundreds of millions of dollars belonging to US citizens. ~paid a fine of $780m ~

If the same were to happen to Coinbase then I would say they better close now or suffer the consequences~

the amounts are not even the same, those who have this much money in bitcoin are never going to use coinbase for bitcoin ever.

besides they have been working with the government from the beginning and honestly i am surprised this has only surfaced today.

it seems like people have forgotten how US government arrested KAT owner?

[Juggy777]

If I remember clearly there was a similar thread and where it was posted that coinbase would oppose any kind of such movement. I think coinbase will reach a amicable settlement with them sooner or later. They are not closing down, they can't afford to actually. Let's hope it gets resolved soon.

[Searing]

As the thread states.what is the outcome

the lazy IRS version of the outcome is they get all these accounts info..they simply run a scrypt of all the accounts BTC addresses on file....and then blanket
ask folk to clarify the individual each transaction of btc movement on coinbase for each address btc you used or from...for tax purposes.....they could automate thiis

and of course if we have no idea at our end what went where no problem..WE were supposed to keep track on paper for all individual btc so IRS worse case is we pay
the tax.you could generate a lot of paper for the taxpayer on coinbase to climb thru for the IRS to say meet our leads



this is gonna be like monkey's flying a plane I tell ya

[aso118]

~ to hide hundreds of millions of dollars belonging to US citizens. ~paid a fine of $780m ~

If the same were to happen to Coinbase then I would say they better close now or suffer the consequences~

the amounts are not even the same, those who have this much money in bitcoin are never going to use coinbase for bitcoin ever.

besides they have been working with the government from the beginning and honestly i am surprised this has only surfaced today.

it seems like people have forgotten how US government arrested KAT owner?

There will be a few large accounts. It is unlike the IRS to issue a summons and follow it up to win the court case, if they didn't suspect large scale tax evasion. It definitely won't be similar to the scale of UBS, but it will be substantial.

[Sir Alpha_goy]

~ to hide hundreds of millions of dollars belonging to US citizens. ~paid a fine of $780m ~

If the same were to happen to Coinbase then I would say they better close now or suffer the consequences~

the amounts are not even the same, those who have this much money in bitcoin are never going to use coinbase for bitcoin ever.

besides they have been working with the government from the beginning and honestly i am surprised this has only surfaced today.

it seems like people have forgotten how US government arrested KAT owner?

There will be a few large accounts. It is unlike the IRS to issue a summons and follow it up to win the court case, if they didn't suspect large scale tax evasion. It definitely won't be similar to the scale of UBS, but it will be substantial.

Watch the price of Bitcoin soar to mask the actual effect this will have.

All it will take is the ask/bid bot to be "reconfigured".

It will be a double edged sword though.

Higher price = less adoption = more tax revenue for the IRS

I feel sorry for whoever is juggling the BTC price right now.

[Wind_FURY]

~ to hide hundreds of millions of dollars belonging to US citizens. ~paid a fine of $780m ~

If the same were to happen to Coinbase then I would say they better close now or suffer the consequences~

the amounts are not even the same, those who have this much money in bitcoin are never going to use coinbase for bitcoin ever.

besides they have been working with the government from the beginning and honestly i am surprised this has only surfaced today.

it seems like people have forgotten how US government arrested KAT owner?

There will be a few large accounts. It is unlike the IRS to issue a summons and follow it up to win the court case, if they didn't suspect large scale tax evasion. It definitely won't be similar to the scale of UBS, but it will be substantial.

Watch the price of Bitcoin soar to mask the actual effect this will have.

All it will take is the ask/bid bot to be "reconfigured".

It will be a double edged sword though.

Higher price = less adoption = more tax revenue for the IRS

I feel sorry for whoever is juggling the BTC price right now.

Adoption of what? The mainstream? I would say that Bitcoin use is ok right now. It is funny listening to the thousands of people who are jaded because they expected Bitcoin to disrupt the banks and be in widespread use by now according to their estimations.

Bitcoin was not made for markets that are served by the banking industry. It will only be used widely in markets that are not served by the banks and markets that do not pay taxes.

[Searing]

So if the IRS wants when the audit...assuming you are correct with your say btc or ltc mining going out and hitting your wallet in the world at such and such set price.....I mean
your are legit and paying your 25% for regular income tax for mining..so moving on to spending your crypto to usd..

NOW with this coinbase ruling and/or say the mythical IRS audit

any dust you move thru coinbase and/or ALL the btc addresses you've ever used to sell mainly BTC to get BTC products

ALL has to have a RECIEPT  in some manner and if from when you put the BTC or LTC on your wallet ..to the time you paid out your $$$ from such addresses

in that you made a 10c gain say..you have to pay 40% (because you spent it less then 1 day and 1 year..so not 20% capital gains) you have to pay 40% on such or 4c

again .including dust ..because it is on your blockchain record.... so this is gonna be a real mess for a lot of folk

like

what is this expense....oh I got that from a guy on www.bitcointalk.org that fixed a ltc titan cube...so what is his name and reciept IRS guy asks....

you can do this for everything including the soda you bought for BTC and owe 4c at 40% capital gains on such ...fun times...

yeah this is gonna work really really well if the IRS decides it wants to play witch hunt

I've been using a CPA and she has been telling me not to worry about 'dust' stuff..this will drive her crazy....

[rickgejr]

It would not surprise me that Coinbase finds itself under attack by hackers trying to destroy records or just shut Coinbase down. I'd move all my coin from Coinbase asap. Or if some new Bitcoin virus changes things. Reverse engineers the records. That might be nice, but the Bitcoin devs wouldn't have the guts. They'd end up in jail.

Certainly, anyone who tried to avoid taxation at Coinbase, on the large scale, will be prosecuted. I don't think they will go after the little guy -- playing around -- having fun -- making pennies. No, this is a lesson. This is a message, since the first one did not work. This is the shot over the bow of Bitcoin (cryptocurrency) in the U.S., since placing the "Battleship Regulation" in the harbor was ignored.

Anyone who thinks otherwise is fooling themselves. The U.S. "system" wants private money gone. They already made it difficult to use by taxing it -- maybe thinking that it would scare the bad players out of the loop. But we know what bad players do -- they go underground. So forcing users underground creates smaller, more compressed groups, of hardcore cryptocurrency enthusiasts and unfortunately, labels good people, criminals. And yes, there are some real criminals in that mix.

So it's guilt by association if you continue to use private cryptocurrencies in the near future, in the U.S. -- my opinion -- unless you buy from a well regulated "system" approved organization. In that vein, I feel that, eventually, in the U.S., the "system" will outlaw all private cryptocurrencies and replace them with Fedcoin and make (force) everyone use that coin and like India, banish not just the big bills, but all cash and limit gold use.

If this happens and I don't think this is a wild scenario, it could send Monero prices through the roof, drive gold values down for a bit and really make a lot of Americans  -- the ones who believe in freedom and disagree with the "system's" probable illegal decision to tax cryptocurrencies -- in the U.S. -- in the first place, since, if I'm not mistaken, private currencies, such as token money, exchanged for dollars in some stores -- at least in the recent past -- were not considered property or regulated by the SEC etc.

I also think that you might see a U.S Supreme Court challenge at some point, but like the "system" employees they are, they will end up in a 5 to 4 decision, to make it look good, that will state that Bitcoin (cryptocurrency) is taxable, just like when they found that forced healthcare insurance was just peachy and that Americans are just a bunch of pushovers. And I'm an American -- for now.

On the bright side, if the "system" in the U.S. can be checked, I feel, like many, that there could be a variety of private cryptocurrencies in the U.S. and elsewhere that will attach themselves to a real substance like gold or silver or some other valuable property (like how Overstock has their CryptoStock etc.) and change the face of money for the near future. And that this technology can be yet another balance against the constant monetary strangulation, devaluation and control by bad governments.

Until then, the money Nazi's reign at the FED. You think that you are free? Not really, the "system" just found a longer term solution to control you and your are messing with that control. Shame on you. You can't really own your money in this day and age. Until we do own our money and our property, they really own us. And I'm not one of those Sovereign Citizen wackos, just a Thomas Jefferson kind of guy. I like to give it to you straight and not sugar coat it -- comrades.

[Supercrypt]

Believe me if there was even a single chance of them paying millions of dollars and even have a chance of going to prison than they would close it , hell they would have already get “hacked” if that were to happen.

So we should not be afraid , I mean if we are talking about the small time users than nothing would happen to us , many coinbase users are not even located in USA or remotly close , and many of them spend so little that it doesn’t worth mentioning.
The high rollers , the whales , the coinbase management , they would be worrying if that would ever happen.

[rickgejr]

The pessimist-realist in me says:

The IRS will conclude that Coinbase did not do enough to make certain that users paid taxes in the U.S. Deep pockets will be drained. They will fine Coinbase and probably prosecute the founders. Federal Prison awaits. They have to make a show of it. Make a point. Send that cold blood out. Nip this thing in the bud.

This is all a effort to shut down Bitcoin in the U.S. As Coinbase sinks into the prosecutorial past, other exchanges will be hit, one by one, two by two, until we all use Local Bitcoins like criminals -- then they will play in that swamp.

Again, get your Bitcoins out of Coinbase and out of any exchange in the U.S. Once the Exchanges are zapped, the IRS will begin to hit the decentralized exchanges via ICANN. Maybe a few non-ICANN coins will avert this problem.

Haven't you been watching? Many of the big cryptocurrency players evacuated the Land of the Free Slaves years ago.

Advice to Coinbase founders: delete all records, send all cryptocurreny funds to a third party and allow users to obtain from there and expatriate asap. Do not fall on your swords. The game is rigged.

Advice to international community: the sun is setting. Bring your crypto home.

Or I could be wrong. Our governments would never do the wrong thing. Never. Just ask India etc.

And the West does not hold the line at righteousness.

[Pursuer]

what can come out of this incident is either Coinbase resisting IRS requests and don't give any information (at least not publicly) which means they continue their service and don't lose many users.
or they start working with IRS publicly and everyone stops using their service for good and they move on to other foreign services for exchange and wallet service.

the third option which I think is the most probably one is that Coinbase starts working with IRS privately and when a couple of Coinbase users got IRS notice in their mail asking them to go to court and pay fines for not paying their taxes it turns into a scandal and Coinbase closes down shop and runs away.

[Searing]

what can come out of this incident is either Coinbase resisting IRS requests and don't give any information (at least not publicly) which means they continue their service and don't lose many users.
or they start working with IRS publicly and everyone stops using their service for good and they move on to other foreign services for exchange and wallet service.

the third option which I think is the most probably one is that Coinbase starts working with IRS privately and when a couple of Coinbase users got IRS notice in their mail asking them to go to court and pay fines for not paying their taxes it turns into a scandal and Coinbase closes down shop and runs away.

4th option

IRS sends a 'blanket' justification letter to all on coinbase asking them for clarification on their coinbase account and to account for all transactions as to 2013 IRS guidelines per individual transactions due
to mining and/or trading and/or captial gains (less then 1 year and 1 day 40% greater then 1 year hold of BTC before spending 20%) etc They could also justify this by the summons being granted that they
suspect coinbase and its users of using btc to default on IRS taxes.....as a cover anyway....

thanks get that out to us soonest

IN that it is up to the taxpayer to prove assets are not criminal and that by getting this order for all of coinbase users due to the fact they suspect all of btc use as fraudulent...that would be the next step in this

blanket process...at least for ease of compliance...from the IRS point of view imho. Remember the IRS is under pressure to show progress on crypto..but they have even LESS IRS agents and likely will lose

more....anyway the above is more then possible imho

In other words they already got the summons granted for a blanket cover for all accounts on the fact BTC is likely suspect. Thus this would be the logical next step. Make everyone on coinbase prove they
are complaint as per the premise of the summons. I mean it is the IRS it is how they roll.

[aso118]

what can come out of this incident is either Coinbase resisting IRS requests and don't give any information (at least not publicly) which means they continue their service and don't lose many users.
or they start working with IRS publicly and everyone stops using their service for good and they move on to other foreign services for exchange and wallet service.

the third option which I think is the most probably one is that Coinbase starts working with IRS privately and when a couple of Coinbase users got IRS notice in their mail asking them to go to court and pay fines for not paying their taxes it turns into a scandal and Coinbase closes down shop and runs away.

Their resisting is not going to be of much use, as the courts have sided with the IRS on this one.
If they work privately with the IRS, it would be unethical. It would do great damage to their reputation if this news leaks.

[cryptotrader81]

I just got an idea guys. For Americans just tell them you sent your BTC to Huobi.com to trade on USD markets and they stole it. We cant be verified on that exchange and the United States government has no jurisdiction. What are they going to do? Call you a liar. Who cares. If we have to claim our profits we should be able to claim our losses. 

[Searing]

I just got an idea guys. For Americans just tell them you sent your BTC to Huobi.com to trade on USD markets and they stole it. We cant be verified on that exchange and the United States government has no jurisdiction. What are they going to do? Call you a liar. Who cares. If we have to claim our profits we should be able to claim our losses. 

You can only take up to a 3k loss off your gross taxes per year. They also would require real names and a receipt for
Every transaction. And yes that includes capital gains on dust

[rickgejr]

In the end, I take my hat off to Coinbase.

Good try, but take a lesson from Smooth, here on Bitcoin Forum. The time ain't ripe yet.

Even good old George Washington used secret codes to 'hide' from the enemy.