Bitcoin and Taxes...IRS Reply to US Congress Due 7 June 2017

7 June 2017, is the deadline for the US Internal Revenue Service to respond to questions posed in a letter authored by three Congressmen. In the 17 May 2017 letter the lawmakers questioned the IRS's overall strategy toward digital currencies in general and their investigation of the Coinbase exchange specifically:

"[W]e strongly question whether the IRS has actually established a reasonable basis to support the mass production of records for half of a million people, the vast majority of whom appear to not be conducting the volume of transactions needed to report them to the IRS. Based on the information before us, this summons seems overly broad, extremely burdensome, and highly intrusive to a large population of individuals."

Last November, the IRS, citing suspicion of potential bitcoin tax avoidance, ordered Coinbase to turn over records on every customer and their transactions. Coinbase refused to comply, claiming that the IRS demands were too far-reaching. This, in turn, led the IRS to file a federal lawsuit against Coinbase to enforce their demands.

That action was discussed in a Fortune magazine article earlier this year where IRS agent David Utzke explained how he ran a computer analysis of hundreds of millions of tax records and found that for tax years 2013 through 2015 only about 800 people each year filed a Form 8949 with their taxes to account for a "property description likely related to bitcoin."

So 7 June is the day. The IRS must explain their actions against Coinbase and their rationale for their current treatment of bitcoin. What do you think their answer will be?

Sources:
http://fortune.com/2017/03/19/irs-bitcoin-lawsuit/
http://www.coindesk.com/the-irs-will-present-its-digital-currency-strategy-to-congress-next-week/