Congress Seeks Answers From IRS About Its Bitcoin Tax Investigation

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Congressional leaders need solutions in regards to the Internal Revenue Service’s ongoing effort to acquire person data from digital currency change startup Coinbase.

In a letter dated 17th March, Senator Orrin Hatch, together with Reps. Kevin Brady and Vern Buchanan, took goal on the IRS, questioning the idea of its investigation and requesting details about its broader technique on digital currencies. The letter was addressed to IRS commissioner John Koskinen.

Hatch is the chairman of the Senate Finance Committee. Brady is the chair of the House of Representatives Committee on Ways and Means, whereas Buchanan leads that physique’s Oversight Subcommittee.

The three wrote:

“…we strongly question whether the IRS has actually established a reasonable basis to support the mass production of records for half of a million people, the vast majority of whom appear to not be conducting the volume of transactions needed to report them to the IRS. Based on the information before us, this summons seems overly broad, extremely burdensome, and highly intrusive to a large population of individuals.”

The transfer comes months after the IRS sough to to compel Coinbase to supply the data, a court docket effort that began in November. At the time, the IRS stated it was looking for details about the startup’s bitcoin clients as a part of an effort to stop potential tax avoidance. The IRS declared digital currencies a taxable form of property in 2014.

Since the IRS first went to court docket, each Coinbase and considered one of its clients moved to stifle the trouble. The tax company later requested one other choose to approve its preliminary summons, and earlier this week, a pair of Coinbase clients (who’re looking for anonymity) asked a federal judge in California to halt the tax company’s summons.

According to the letter, the three members of Congress are looking for data in regards to the IRS technique on digital currencies – which its personal watchdog has criticized as poor and in want of an overhaul – in addition to the justifications for its effort in opposition to Coinbase. The group stated it desires solutions earlier than seventh June.

Notably, the three additionally requested whether or not the IRS would take a extra hands-off method to digital currencies with the intention to facilitate adoption.

“Will the IRS think about a de minimis exemption or different motion to take away sensible obstacles to such reasonable, transactional use of digital currencies?” the letter acknowledged.

Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an possession stake in Coinbase. 

Congress image through Shutterstock

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