- The IRS is still tracking down hundreds of Coinbase traders, some of whom used fake names.
- The agency also suggested that it has data on users of certain offshore exchanges.
- IRS chief says $1 trillion in US taxes go unpaid every year, partly due to the crypto boom.
- See more stories on Insider’s business page.
On the same day crypto trading platform Coinbase made its Wall Street debut, the IRS said it’s still looking for the names of hundreds of anonymous users who made more $100 million on the exchange.
Coinbase turned over data on thousands of users to the IRS in 2018, leading to $13.1 million in new tax assessments. Even though 1,300 users didn’t have a taxpayer ID, about 1,000 users didn’t provide a physical address, and 170 gave a fake name, the IRS was still able to identify many of them.
But the IRS said it still doesn’t have enough information to identify more than 750 Coinbase users who made over $100 million before 2018, according to an April 14 court filing.
“That just falls in line with the IRS’s overarching goal of making sure taxpayers are compliant,” said Brett Cotler, a lawyer at Seward & Kissel who has helped clients with cryptocurrency tax matters. “Generally, they’re not going after small customers who are dabbling in the space.”
The agency said it has sometimes been hard to get information from Coinbase without an email address or phone number. Coinbase has said it can’t even search for users by their taxpayer ID number, which is often a Social Security number, according to the IRS.
Coinbase wasn’t accused of wrongdoing and isn’t a party to the lawsuit. A representative for the company didn’t respond to a request for comment.
The IRS revealed the new details about its search for people who haven’t reported cryptocurrency income in an ongoing case involving Kraken, another exchange. The IRS is asking a court to make Kraken turn over user information in order to find potential tax cheats.
IRS Commissioner Charles Rettig recently estimated at a hearing that around $1 trillion in US
taxes
go unpaid every year, partly due to the boom in cryptocurrencies. That’s more than double the agency’s previous estimate of $441 billion per year.
“Cryptocurrencies and other technologies create huge new opportunities for tax cheats to rip off the American people,” Sen. Ron Wyden said at the hearing.
Coinbase users aren’t the only ones on the IRS’s radar, either. Karen Cincotta, an IRS agent, said in a filing that the agency has “cryptocurrency platform data received from other sources relating to foreign-based cryptocurrency exchanges.” The exchanges weren’t named, though many exist, and it isn’t clear what “platform data” includes. Popular offshore exchanges include Bitfinex and Binance.
Cincotta said the agency has been searching the foreign crypto exchange data “using telephone numbers, email addresses, and internet protocol addresses.”
