In a recent editorial for American Banker, Coin Center executive Jerry Brito lays out why this apparent fishing expedition by the agency is based on flimsy evidence and a simplistic assumption that all Bitcoin users are tax cheats:
In this case, the specific criteria are not very specific at all. The government is seeking the information on every U.S. customer who used the exchange between 2013 and 2015 – a class so broad that it encompasses millions. And what is the “reasonable” basis? In its filing, the IRS notes the fact that some people have indeed used bitcoin to evade taxes, as well as “a public perception that tax evasion is possible with virtual currency.” But all the IRS cites to back up that point is a Huffington Post article. This is an incredibly weak foundation to support breaching the privacy of millions of Americans. It’s possible to use cash to evade taxes, so by this standard the IRS should be able to access the private records of everyone who uses cash with a single court order.
You can read the full editorial here. We will continue to voice our opposition to this request, watch this space for updates.