IRS Argues Coinbase Users Cannot Challenge ‘John Doe’ Summons

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On Tuesday, attorneys for the Internal Revenue Service filed the agency’s response to Los Angeles attorney and Coinbase user Jeffrey K. Berns’s motion to prevent the IRS from serving a “John Doe” summons to Coinbase. That summons would require Coinbase to provide the IRS with the identities and account information of all United States customers who exchanged digital currencies on the company’s exchange from 2013 to 2015.

Berns had sought to intervene in the matter, arguing that the summons was and overly broad measure that could have a chilling effect on the cryptocurrency industry. He also suggested that allowing the IRS to have the information in question could place customers’ personal information at risk due to IRS computer security concerns, and accused the government of using the tax agency to intentionally undermine digital currencies.

In its response, the agency asserted that Berns had no right to challenge the summons, since there was no enforcement action involved in the case. The IRS also used the filing to note that the summons would no longer apply to Berns, since he chose to identify himself as a Coinbase customer when he filed his motion. As a result of that self-identification, the agency has notified Coinbase that its summons no longer applies to him.

The IRS filing addressed Berns’ arguments individually, including his claim that the agency’s move was politically motivated. In its response, the agency argued that:

“It is completely far-fetched to conclude that the government is pursuing the John Doe summons to harass taxpayers who use virtual currency or to further some sort of a political agenda against virtual currency use.”

While the IRS referred to that accusation as an “anti-virtual currency conspiracy theory” that lacked any evidence, it is worth noting that the agency has in fact admitted to engaging in politically-motivated taxpayer abuse in the past – with the targeting of conservative groups during the 2012 election being just the most recent example.

Berns has not yet indicated how he will respond. For its part, Coinbase has previously declared its intention to fight the IRS summons and protect its customer's account information.

The views expressed by the authors on this site do not necessarily represent the views of DCEBrief or the management team.

Author: Ken Chase

Freelance writer whose interests include topics ranging from technology and finance to politics, fitness, and all things canine. Aspiring polymath, semi-professional skeptic, and passionate advocate for the judicious use of the Oxford comma.

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