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Coinbase Users File Motion to Block IRS’ Bitcoin Tax Summons

Last Updated March 4, 2021 4:56 PM
Rebecca Campbell
Last Updated March 4, 2021 4:56 PM

The multi-national law firm of Berns Weiss LLP has filed a motion on behalf of two unidentified Coinbase users in a bid to intervene and challenge a ‘John Doe’ summons issued by the Internal Revenue Service (IRS) on Coinbase.

Last December, Berns Weiss LLP filed a motion to intervene on behalf of Coinbase customer Jeffrey Berns. The Government withdrew the summons as to Mr. Berns, and argued in its opposition papers that the withdrawal mooted his motion.

Now, though, the Government has since filed a new motion in an attempt to enforce the summons on Coinbase. Reacting to the motion, the law firm has proceeded to file a new motion to intervene in the enforcement proceeding and to quash the summons.

It’s also hoped that the two Coinbase customers will be able to proceed anonymously so as to stop the Government from withdrawing the summons and mooting the motion again.

A statement from Berns Weiss LLP said the following:

On March 16, 2017, when the Government filed its petition to enforce the IRS summons, we indicated that we intended to file a motion to intervene and to quash the summons on behalf of Coinbase customers in order to protect them from this government overreach.  As the Court recently directed the Government and Coinbase to agree on a schedule for Coinbase to oppose the petition, we have now filed such a motion seeking to insure that Coinbase’s customers are represented in the proceeding and that the Court has the opportunity to consider their perspective.  Additionally, to prevent the Government from repeating its prior tactic of withdrawing the summons as to a proposed intervenor and then contending that the proposed intervenor’s motion to intervene is moot, Movants are seeking permission to proceed anonymously in this matter under fictitious names.

This is the latest development with the case, which began in November 2016 when the IRS started targeting Coinbase users, specifically bitcoiners. According to the IRS, they revealed in March that less than 1,000 were declaring their bitcoin profits or losses in their yearly tax returns after conducting an investigation from 2013 to 2015.

It remains to be seen how successful this latest motion from the IRS will be and whether or not the two individuals involved will succeed in challenging the new motion.

However, with Coinbase issuing a statement  in March stating they had not handed over any records under the summons, it seems unlikely that they will do so anytime soon.

Berns Weiss LLP Partner Lee Weiss said:

We look forward to the opportunity to finally litigate the merits of the IRS Summons and for the Court to consider the grave privacy and financial risks to which Coinbase’s customers will be exposed if the summons is enforced in its current form.

Featured image from Shutterstock.