US Congressional leaders support Bitcoin? Ask IRS to explain its subpoena to Coinbase

Some U.S. politicians appear to be taking issue with the actions taken by the Internal Revenue Service (IRS) against users of bitcoin exchange Coinbase.

Three congressional leaders are asking the IRS why it subpoenaed Coinbase

Representatives Vern Buchanan, Kevin Brady and Senator Orrin Hatch recently sent a letter to IRS Commissioner John Koskinen expressing concerns about the agency’s legal battle with Coinbase. According to the letter, members of Congress have the authority to examine the IRS’s actions in new tax administrations under Senate and House rules. This includes the emergence of digital currencies, as explained in the letter, and the three officials are requesting information about the IRS’s subpoena against Coinbase.

The congressional letter to the IRS Commissioner said:

“Please describe the IRS’s current digital currency policy and provide any existing policies and procedures.”

In addition, the letter asked the following questions:

“How does the John Doe subpoena that the IRS served on Coinbase apply to the IRS’s cryptocurrency policy? What is the IRS’s rationale for demanding all user records from Coinbase this time?”

"We strongly question whether the IRS has established a reasonable basis for doing so."

Coinbase is resisting the IRS's subpoenas for being too broad, and consumers have filed lawsuits against the IRS's requests. Coinbase lawyer Juan Suarez said in March this year, "Coinbase remains concerned that this government subpoena is indiscriminate and overbroad. We do not have any records under these subpoenas."

According to an affidavit written by IRS tax agent Utzke, the agency’s conclusion is based on the fact that fewer than a thousand Coinbase customers file tax returns. However, the three members of Congress said they are questioning the IRS’s move to request records for nearly 500,000 Coinbase users.

“We strongly question whether the IRS has truly established a reasonable basis to support the mass production of records for half a million individuals, the vast majority of whom do not appear to have conducted sufficient transactions to be reportable to the IRS. Based on the information we have, these subpoenas appear to be overbroad, difficult, and intrusive to a large number of individuals.

The letter from members of Congress said they would appreciate it if the IRS could provide them with a brief description of the subpoenas and that they would like to receive a response from the IRS by June 7, 2017.

“The IRS’s actions in this case could set a dangerous precedent for companies seeking to facilitate cryptocurrency transactions, causing them to worry about the possibility of receiving similar subpoenas.”