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Only 802 people reported bitcoin earnings to IRS in 2015, court filing shows
New documents filed by the Internal Revenue Service (IRS) in San Francisco federal court have revealed additional details into the agency’s investigation into possible tax fraud by digital currency users of Coinbase, CryptoCoinsNews reported.
A new affidavit from IRS agent David Utzke states that only a small number of users declare their profits or losses resulting from bitcoin or digital currency transactions in their yearly tax returns.
In late 2016, the tax agency received the permission to serve a summons on Coinbase to disclose its customer records (2013-15) in order to investigate probable tax fraud by its users. In December 2016, a Coinbase user filed a motion in federal court seeking to block the IRS from accessing personal and transactional information of individuals who used its platform during 2013-2015.
The new document explains that the IRS maintains a database called the Modernized Tax Return Data Base (MTRDB), which contains some of the information reported on electronically filed tax returns. Capital gain or loss for property transactions (which gains and losses from virtual currency are considered) are reported on Form 8949.
“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”, it stated.
In an official statement, Coinbase said:
“Coinbase remains concerned with the indiscriminate and over broad scope of the government’s summons and we have produced no records under the summons.
“Our legal team is in the process of reviewing the IRS’s motion. We will continue to work with the IRS to assess the government’s willingness to fundamentally reconsider the focus and scope of the summons. If it does not, we anticipate filing opposition papers in court in coming months. We will continue to keep our customers updated as to status.”