The IRS has filed a petition with the court seeking to investigate Coinbase customer information

The IRS is seeking to obtain the identities and transaction history of all Coinbase US customers, and has filed a petition with the court, hoping to issue a "John Doe" subpoena to Coinbase. Specifically, Americans who have conducted virtual currency transactions at any time between January 1, 2013 and December 31, 2015 are within the scope of the investigation. This is very broad and may include millions of Coinbase customers.

John Doe subpoenas are often used against offshore banks and are a powerful tool used by the IRS to identify tax evaders. In its filing, the IRS cited several examples of virtual currencies being used to evade taxes, as well as the public’s perception of it.

It is not surprising that the IRS is investigating the possible use of cryptocurrencies for tax evasion. But what is surprising is that the IRS is asking for the identities and all transaction history information of millions of Americans. Coinbase responded:

"We take user privacy very seriously and work hard to protect it. We are looking very carefully at this petition and the scope of the government's powers associated with this request."

I am not a tax attorney, nor an expert on these types of petitions, but I can’t imagine how many people might be affected by a request like this, and I hope the court will handle it with discretion, so stay tuned.