Monday, 28 November 2016 09:50

US seeks details of digital currency users Featured


The US Internal Revenue Service has issued a broad order to the cryptocurrency exchange Coinbase to provide details of its users in order that it can be ascertained whether or not they have complied with internal US revenue laws.

The order, referred to as a "John Doe" summons was issued on 17 November, according to a report in The Guardian.

Experts told the newspaper that this was probably the beginning of a bid to try and pull digital currencies like bitcoin into the mainstream.

The IRS is seeking the details of all Coinbase users in 2013, 2014 and 2015.

Coinbase has said that it will fight the order in court.

Digital currencies are taxed in the same way that gold is, with capital gains tax to be paid when their value appreciates.

To back up its claims, the IRS cited three cases of anonymous users who had used digital currency to avoid paying taxes. Two of these were corporates with annual income of several million dollars; they used Coinbase wallets and hid bitcoin transactions as technology expenses on tax returns.

Some cryptocurrency experts told The Guardian that the IRS was making a test run after it had been blamed by the US treasury inspector-general for not doing enough to regulate digital currencies.

In a statement on 18 November, Coinbase said: "Our customers may be aware that the US government filed a civil petition yesterday in federal court seeking disclosure of all Coinbase US 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 co-operate 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."


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Sam Varghese

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Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.



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