The U.S. government’s battle to get Coinbase to comply with its summons to provide information about its customers continues. A federal judge has agreed to move a hearing date to March 23 to consider arguments against the summons.
On Feb. 3, 2017, Jacqueline Scott Corley, a U.S. magistrate judge, granted the government’s request to continue the hearing date to March 23, 2017 for motions to intervene filed by attorney Jeffrey Berns and Coinbase in their efforts to challenge the summons served by the IRS.
Berns, a Coinbase customer and attorney, filed a motion on Dec. 13, 2016 to quash the IRS summons or for an order scheduling an evidentiary hearing and permitting limited discovery. On Jan. 11, 2017, Coinbase filed a motion to intervene and a motion to change the date upon which Berns’ motion to intervene was set for hearing.
On Jan. 12, 2017, the court rescheduled the hearing on Berns’ motion to Feb. 16, 2017.
The United States then sought to continue the hearing to March 23, not for purposes of delay, but because the United States is considering filing a petition to enforce or take other action with respect to the John Doe summons, according to the court document. If more time is provided, a hearing on motions can be avoided altogether, sparing the court’s judicial resources and the parties’ time and expense, the court documented noted.
Coinbase has said it wants customers to know that while the company has chosen to fight the IRS on releasing customer information, it remains committed to complying with tax reporting requirements. Brian Armstrong, Coinbase CEO and co-founder, appealed to the IRS to work with Coinbase and suggested a tax reporting form that Charles Schwab and Fidelity use might be a solution.
Coinbase views tax law compliance as a key to its success, Armstrong noted. Providing a way for people to exchange local currency for digital currency requires complying with the government. Armstrong said 20% of the company’s 130 employees are involved in compliance in some capacity.
Coinbase has filed 1099 forms for merchant customers and has responded to numerous subpoenas for specific cases, he noted. The company created a cost basis report to assist customers with tax reporting.
Following Berns’ filing, government lawyers argued that Coinbase’s customers have no legal basis to try and stop the IRS from acquiring user records. This would mean Berns has no right to intervene in the summons. Department of Justice lawyers went as far as withdrawing the summons pertaining to Berns.
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