Lawyers call IRS interest in Coinbase a ‘red flag’

US authorities are signaling a growing interest in Coinbase users, and this could be a ‘red flag’ for holders of digital assets, said representatives of the law firm David W. Klasing.

In October, the trading platform published its first transparency report. Among other things, it notes requests for user data by the U.S. Internal Revenue Service (IRS).

‘The IRS is requesting information from Coinbase in order to verify its compliance with its taxpayer registry and to identify discrepancies in cases where assets on the exchange are not reflected in tax declarations,’ the firm said.

Representatives of David W. Klasing warned that tax evasion carries serious consequences. They urged holders of Bitcoin and other cryptocurrencies to amend their returns and furnish the IRS with all necessary information.

‘As soon as an audit or criminal tax investigation begins, it will be too late,’ the lawyers concluded.

As a reminder, in August the IRS required US residents to report any cryptocurrency transactions on the first page of their individual tax return.

At the end of October, the agency introduced amendments to Form 1040, obliging disclosure of coins received as a result of hard forks. Indicating the existence of digital assets when there are no buying or selling operations is not required.

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