What’s Going on With CoinBase vs. IRS?
Most people doing anything with cryptocurrency or Bitcoin have at least heard of the fracus going on right now between the IRS and the popular cryptocurrency exchange Coinbase.com . For those who might not be familiar with the situation or its significance, this is my summary based on the research I’ve done.
The IRS, as the Pursers of the Dark Side, is most assuredly a not big fan of Bitcoin and cryptocurrency. Apparently they recently identified 3 tax evaders who didn’t pay what the IRS thinks they should have in taxes. Since 2 of these 3 were Coinbase users, the IRS is stalking Coinbase now.
Almost anybody who deals with government agencies or bureaucrats knows that the often don’t distinguish between what they have the legal authority to do vs. what they have the power to do. Frequently they do what they want anyway.
In the case of the IRS and cryptocurrency, the IRS does have some regulations regarding cryptocurrency reporting but they are muddled and unclear. The regulations (as I understand them) give various reporting requirements to cryptocurrency exchanges but rely on the ‘honor system’ (plus the IRS’s confused and complex regulations thus far) for declarations from the individual taxpayer.
In this case, Coinbase contends that it already complies with IRS regulations as they presently exist and further says that the IRS demand is too broad and burdensome and presumes the guilt of the entire Coinbase customer base.
Note: Looking at this IRS behavior it’s easy to see that Irwin Schiff, was right. Irwin was an expert on the US Constitution and US jurisprudence as it relates to the Federal Income Tax and its enforcement. His contention to his dying day was that was that the federal income tax was totally misunderstood by the average citizen and illegally interpreted and enforeced by the IRS… with the connivance of the US court system. He successfully defended himself from the IRS for years and also assisted many of his students in doing so he yet was eventually arrested and tried in an illegal “show trial”, illegally imprisoned, denied proper medical care, and died after over 10 years in prison.
Irwin’s great book, The Federal Mafia, still downloadable for free in PDF form on his website, www.paynoincometax.com, is a guaranteed eye-opener and gives a better understanding why cryptocurrency is surely something which keeps IRS agents, government fat-cats, and the industrial elite awake at night because it is a direct challenge to their control over the affairs of men and nations.
Many observers agree that the IRS will eventually get Coinbase’s records but it might be a short-lived Pyrrhic victory. If the general public continues to learn about and adopt the cryptocurrency and the blockchain, they eventually simply won’t need ‘big government’.
What has recently rekindled interest in the IRS vs. Coinbase situation is that since the IRS has not thus far been able to intimidate Coinbase into giving up their customer records (because Coinbase knew the law), the IRS is using something it does have the power to do…i.e. Issue a “John Doe Summons”.
A John Doe summons is the type of summons which allows the IRS to force a company to surrender their customer records because the IRS says the suspect somebody (but they don’t know who) within the group is guilty of tax evasion.
Many people interpret the IRSs’ actions as simply a witch-hunt designed to intimidate the general public and virtual currency sellers into the charade of “voluntary compliance” and if the IRS gets away with this tactic with Coinbase, one can only wonder what they might do next.
Note: Irwin Schiff often correctly said that the US tax laws are extortion… not voluntary compliance. Anybody interested in this subject should delve into his excellent and timeless videos on YouTube.
But that what the ongoing saga of the battle between Coinbase and the IRS is about. Now you know. Is it a good idea to be a Coinbase customer right now? IMHO…. Probably not.
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