The IRS Might Know About Your Crypto

TL;DR - If you use a custodial exchange, the IRS can demand your account records. In fact, Coinbase handed over the info of 14,000 accounts in 2017, and these people are now receiving love letters from the IRS.

As the ridiculous cryptocurrency tax regulations have come into play over the past few years, so has their enforcement. The IRS has been sending out love letters by the name of Notice 6174A to taxpayers. These letters were sent to suspected crypto users who didn’t mark themselves as such on their tax returns.

But Bitcoin is supposed to be anonymous, right?

Not for Coinbase or other custodial wallet users!

Back in 2017, the IRS demanded the information of 14,000 Coinbase account holders.

This is after the IRS realized that only 800 to 900 people in the entire US had reported Bitcoin gains for the 2013 to 2015 tax years. 😢

Grabbing Coinbase by the collar, a judge approved them to receive Social Securiy numbers, names, birth dates, addresses, account records, and invoices. They also asked for the public keys of the accounts and copies of IDs, but this was denied.

Solutions:

If you have a custodial wallet (one managed by a platform), you should get your crypto out of there now and into a non-custodial wallet where you manage your keys and your coins.

StackWallet (stackwallet.com) is my current wallet of choice for its privacy, excellent user experience, support for many coins, and built-in exchange.

Got a friend who uses Coinbase? Share this with them!

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