Only 807 People Have Declared Bitcoin for Tax Purposes According to IRS

Only 807 People Have Declared Bitcoin for Tax Purposes According to IRS

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Only 807 people have declared Bitcoin for tax purposes, according to court documents filed by the IRS in San Francisco. If true, it is likely only a tiny percentage of virtual currency users have reported profits and losses in their annual income forms.

Also read: Some Blockchain Tokens are Securities, Researchers Find

Is the IRS Warning Bitcoiners to Declare Bitcoin for 2017?

Bitcoin

Filed in San Francisco federal court on Thursday, the new documents further shed light on the reason why IRS has asked Coinbase to hand over a broad range of customer data, including every customer account and detailed transaction records over a considerable period. Coinbase pledged to fight the request.

In a new affidavit from IRS agent David Utzke, he discovered that fewer than a thousand people filed a Form 8480 to account for a “property description likely related to bitcoin.”

The affidavit reads: “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.”

Coinbase said on Friday it has yet to hand over information. “Coinbase remains concerned with the indiscriminate and over broad scope of the government’s summons and we have produced no records under the summons,” wrote Coinbase lawyer, Juan Suarez.

According to a Fortune source, the IRS and Coinbase have been in talks over what information exactly the digital currency exchange would provide.

Bitcoin

The IRS received approval from a California federal court last November – just in time for tax season – to serve a so-called John Doe summons on Coinbase to determine whether or not Bitcoin users are declaring their virtual currency. 

Bitcoiners “may fail, or may have failed, to comply with one or more provisions of the internal revenue laws,” the IRS opined in 2015.

The IRS has therefore requested user records between 2013-2015 from Coinbase, including transaction history, IP addresses and transcripts with customer support. Many Bitcoiners, to be sure, complain the IRS never provided guidance, even though requested by academics and accountants several years ago.

All Users of Virtual Currency Are Evading Taxes?

Brian Armstrong, Coinbase founder and CEO, publicly rebuked the subpoena. “Asking for detailed transaction information on so many people, simply for using digital currency, is a violation of their privacy, and is not the best way for us to accomplish our mutual objective,” he wrote on Medium.

He added: “The IRS incorrectly implies that all users of virtual currency are evading taxes.”

Tax industry organizations have called for more clarity when it comes to Bitcoin taxes. “Creating a taxation framework that is stable and standardized, adaptable to digital trends, and maintains basic privacy standards is key to the broader development of the US bitcoin industry,” wrote the Americans for Tax Reform.

It could be, of course, that the IRS’ subpoena to Coinbase is their way of telling Bitcoiners in general that this is the year to start declaring.

Do you think the IRS is getting serious about Bitcoin taxes? Let us know in the comments below.


Images courtesy of Shutterstock, IRS, Coinbase


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  • sjs

    Never fear, Perry Woodin CEO Node40 is here with software that lets you declare your Dash profits on form 8949 and the bitcoin version is not far off. Doesn’t it make you glad you have a friend on the inside?

  • laid back dude

    You shouldn’t be handing money over too the IRS in the first place, there crooks and will waste your money on very stupid decisions.

    • Roger Ver

      And spend your money to drop bombs on people around the world too.

    • RobSa

      Don’t you use government services? What about subsidized healthcare? Do you support the widespread deployment of user pays toll roads?

      • laid back dude

        i dont live in America. My country is not trying too take over the world . I pay the little taxes the gov’t expects out of my poor ass. They even give Rebates back some years but its only a couple hundred bucks a year. Toll roads are a quick way for a politician too end there career and they quickly are removed soon after being installed where ever they pop up.

      • concerndcitizen

        You’re brainwashed by the communists. laid back dude has a point, most of the funds are used to buy votes, wage wars and imprison the population.

  • Brian Menendez

    the whole purpose of cryptocurrencies is to get away from the irs

    • concerndcitizen

      Not if you use Coinbase or any other exchange.

  • Tracer289

    The income tax is a constitutional excise, and you’ve been taken to the cleaners. I suggest you read cracking the code by P.E. hendrickson
    The internet is revealing all sorts of interesting things, including the nature of Constitutional excise taxes such as the income tax.

  • Patrick Little

    They are an irredeemable and un-ratified organization. They collect for whom and for what reason??? US GDP and Special Interest and Federal Reserve far out weigh funding the Country. They are collection of burrs on the back side of my least favorite mule with no real reason to exist or operate. My family for four generations have given blood in battle and that far exceeds their contribution to society. If they really want to be productive and put the US money to good use, they should turn all their computational power into hashing for the good of all anonymous secure verified transactions. They would reap what they seek and actually turn a profit for the American People and serve for the first time in their over glorified history, a profit for the American People.

  • cseverance

    Taxation must be a two way street. If the IRS is going to try to collect revenues from crypto profits then they must be ready to recognize them as tangible assets. How can you collect profits on something that does not exist or is not recognized by the IRS as legitimate transactions? This is a very interesting crossroads the government will have to negotiate and I am interested to see if they take the high road or low road on this one.

    • concerndcitizen

      It’s property. They would like to outright ban crypto, but that ship has sailed, not to mention people will just move things offshore.

  • Joe E.

    There’s no way the IRS can conclusively, without a doubt, ever convict someone for not reporting Bitcoin earnings. It’s impossible, so just never report it.

  • sjs

    No profits to declare the way the bitcoin price is moving. Does the IRS allow deductions for losses on bitcoin?