Techbros may find themselves in tax hell after the IRS prevailed in a fight with the largest US cryptocurrency exchange in a fight over user data, Coindesk reports. The revenuers had initially sought a database of all users, but ended up settling for data on about 13,000 who have made more than $20,000 in exchanges during any year between 2013 and 2015. The court order means data from those years will now be handed over to the IRS, which could then audit individuals who didn't report income hidden in cryptocurrency.
"If you have concerns about this, we encourage you to seek legal advice from an attorney promptly," Coinbase wrote in an email sent to affected customers.
According to court filings, the IRS started pushing after three people who were targeted in investigations "ultimately confessed to using digital currency in a bid to avoid scrutiny." At least one of them was a man who had used offshore accounts previously, and thought that cryptocurrencies would be safe.
Customers who say they paid their taxes include Bitcoin evangelist Andreas M. Antonopoulos, who says he saw it coming.
Received notice from Coinbase today, that my account is one of the 13,000 that they will have to turn over to the I… https://t.co/IkgmhQ7KLT— Andreas ☮ 🌈 ⚛ ⚖ 🌐 📡 📖 📹 🔑 🛩 (@Andreas ☮ 🌈 ⚛ ⚖ 🌐 📡 📖 📹 🔑 🛩) 1519423941.0
Though it's not a household name, Coinbase is huge. In fact, it now has more clients than Charles Schwab.
The Republican's regressive new tax law eliminated a potential loophole in crypto capital gains, meaning Bitcoin investors will have to pay taxes going forward. And if they don't, the IRS seems poised to find out about it.
This could have a huge effect. As The Verge reported: "Coinbase boasts nearly 6 million customers, but according to a government filing, fewer than 1,000 US citizens have reported cryptocurrency holdings on their taxes."
You can self-report that "mistake" on your taxes here.