Coinbase, the largest public digital currency exchange, is the target of an IRS summons that seeks information on Coinbase customers who may not have properly reported their profits from trading virtual currencies such as Bitcoin. We last wrote about Coinbase and the IRS sparring in court, here. On February 23, Coinbase informed clients that it will be revealing client information to the IRS within twenty one days. The information to be provided will include client names, taxpayer identification numbers and Coinbase currency transactions. The IRS will utilize this information to begin audits.
As we’ve written, the IRS offensive against digital currency non-reporting is similar to the way the IRS has pursued foreign banks to uncover “secret” foreign accounts that had not been properly reported to the IRS. The efforts of the IRS and U.S. Department of Justice eventually led to the death of bank secrecy.
If you have or had an account at Coinbase, and you may not be in IRS compliance regarding your digital currency transactions, now is the time to take pre-emptive action. We can advise you on how to come into IRS compliance. Coming into compliance sooner will avoid significant penalties, fees and prosecution. Once the IRS begins an audit or investigation, pre-emptive action may not be as successful.
Please contact us to discuss IRS compliance for Bitcoin and other virtual currencies.
Please see our earlier articles on virtual currencies and tax compliance:
- Now Is The Time To Confirm Your Bitcoin Is Tax Compliant
- Currency is Virtual, but Real Time is Ticking for Voluntary Disclosure of Virtual Currency
- IRS Advances Against Bitcoin Tax Evasion