The Internal Revenue Service (IRS) has revealed that only a small number of people are declaring their bitcoin profits or losses in their yearly tax returns.
Documents, filed Thursday, by the IRS in San Francisco federal court, come a year after the IRS summoned Coinbase to hand over customer data, including customer account information with detailed transaction records.
However, Coinbase refused to comply while a customer of Coinbase filed a motion in December to block IRS access. Coinbase has since filed a response to the IRS summons, asking the court to quash the summons in its entirety.
Yet, in March, the IRS filed a lawsuit to carry out its summons enforcement.
It can be revealed, though, in a new affidavit from IRS agent David Utzke, how the agency is undergoing its investigation.
According to Utzke, the IRS holds a multitude of databases with information from filed returns. One of these databases is the Modernized Tax Return Data Base (MTRDB), which continues information reported on electronically filed tax returns.
Capital gain or loss for property transactions, including those of digital currencies, are reported on Form 8949. However, according to Utzke, he found that less than 1,000 people filed a Form 8949 to detail ‘property description likely related to bitcoin.’
After receiving results from searches he had conducted during 2013 to 2015, he reports that in 2013, 807 people reported a transaction on Form 8949; in 2014 that figure was 893; and in 2015, that fell to 802.
In a statement from Coinbase, they said they had not provided any records under the summons:
We will continue to work with the IRS to assess the government’s willingness to fundamentally reconsider the focus and scope of the summons. If it does not, we anticipate filing opposition papers in court in coming months.
Undoubtedly, Coinbase has attracted the attention from the tax authority because of how long it has been running. At a time when Bitcoin wasn’t worth much to a market value that is now worth over $17 billion, there are many people who could have gained a significant amount of capital, but have yet to pay any tax on the profits they received.
Of course, while Coinbase is the most mainstream Bitcoin platform, it remains to be seen whether the IRS will also target other digital currency operators. With digital currencies such as Ethereum growing, they could find themselves the target of the tax agency in the future too.
Featured image from Shutterstock.
Blockchain A Potential Significant Enabler for UK Solar, Says SolarCoin Co-Founder
The blockchain presents the opportunity of becoming a ‘potentially significant enabler’ for U.K. solar, according to SolarCoin co-founder Francois Sonnet.
Speaking ahead of his panel on the future
Blockchain News Recap With Charlie Shrem: BlockShow Europe 2017 Special
As we approach the highly anticipated BlockShow Europe 2017, Cointelegraph has met with Charlie Shrem, one of the twenty big-name speakers of the event, to discuss the hottest Blockchain news.
Why South Korea is Second Largest Ethereum Market, 17% of All Trading
Over the past few weeks, Ethereum has experienced a truly exponential growth in terms of market cap and development community, reaching a market cap of $4.37 bln. According to various sources and
Roger Ver Agrees To Sell BTC For BTU At 1:1 Ratio
Roger Ver, the bitcoin broker/asset manager and Bitcoin Unlimited supporter, has agreed to a one-to-one trade of Bitcoin Unlimited (BU) for bitcoin, signaling his confidence in Bitcoin Unlimited. The
Apple Rubbishes Breach Claims from Hackers Demanding Bitcoin and Ethereum
Apple has announced that their system has not been breached by a hacker or hackers, after it was reported earlier this week that they were attempting to use an alleged store of iCloud accounts and App
Bitcoin “Ponzi Scheme”?: Indian Ruling Party MP Asks Government
Kirit Somaiya, a Member of Parliament of the ruling BJP in India, has raised concerns about Bitcoin being a Ponzi scheme. The rapid rise of Bitcoin has attracted attention in India, coming as it does
Ad-Blocking Browser Brave Introduces New Way to Support Websites
Online advertising is a field that represents a “broken system with eroded revenue, trust and privacy” according to an announcement made by Brave, the Web browser that promises to make your internet
Report: Rise in Bitcoin Related Scams on Social Media
A new report has found that with the value rise of Bitcoin there has been an increase in the number of scams involving the digital currency on social media and websites.
The report, ‘Bitcoin Scams