The ongoing IRS battle with bitcoin gets political as GOP legislators jumped into the fray today.  You may remember a piece we did earlier this year regarding the IRS going after bitcoin exchange Coinbase.  GOP legislators sent a strongly worded letter to the agency asking whether the “IRS has a strong foundation for amassing the records of half a million people.”  Previously, the IRS filed a “John Doe” summons which is a strategy to obtain a list of all of the exchange’s customers.  This would allow the IRS to identify US taxpayers who are not reporting their holdings, income or associated taxation with bitcoin.  The next logical conclusion would be an extensive IRS audit for Coinbase account holders.

The IRS’ position is these taxpayers are actively attempting to evade US taxes.  The GOP legislator’s position is the IRS doesn’t have the capacity to amass and protect the private records of 500,000 US taxpayers.

The first amazing statistic is the number of US taxpayers with accounts at coinbase (half a million).  The second is the potential windfall for the US treasury if the owners of these accounts are identified and proper taxes are assessed.  The key takeaway is this:

There is no more safe haven from the IRS.

The IRS has immense power, and they are pursuing all legal resources to identify the accounts and identities of the associated beneficial account owners.  If you have attempted to hide income and assets from the IRS using a bitcoin strategy or a foreign corporation or account strategy the IRS is closing in.  It isn’t a matter of “if” they will find you, it is a question of “when” they will find your information and how much you will owe to the IRS when they do.  A secondary issue one may face is exposure to criminal tax evasion charges and the genuine risk of jail time.

As the IRS battle with bitcoin gets political our recommendation today is the same it was when this case heated up back in January:

If you have accounts with Coinbase, Inc. or another Bitcoin or digital currency agency you should contact the experienced San Diego tax attorneys at Allen Barron for a free consultation at 866-631-3470.  It is better to file amended returns before the IRS contacts you for an audit.

Contact an Estate Planning, Business Law Or Tax Attorney Today

To set up a free, no-obligation consultation with one of our knowledgeable San Diego based estate planning, business and tax lawyers, or learn more about our tax preparation, accounting and business advisory services call us at 866-631-3470 or contact us.