THE BEGINNING: LITIGATION OF COINBASE.
On November 17, 2016 the formal litigation commenced between the San Francisco virtual currency corporation, Coinbase, by an administrative “John Doe” summons to Coinbase
The attorneys for the Government are very heavy in experience for complex litigation and criminal litigation; they are:
1. CAROLINE D. CIRAOLO, Principal Deputy Assistant Attorney General
2. JEREMY N. HENDON, Trial Attorney for the U.S. Department of Justice, (DOJ)
3. AMY MATCHISON, Trial Attorney United States Department of Justice, (DOJ)
4. BRIAN J. STRETCH, United States Attorney
5. THOMAS MOORE, Chief, Tax Division
6. COLIN C. SAMPSON, Assistant United States Attorney
The above Government attorneys filed in the U.S. District Court, Northern District of California, an Ex Parte Petition for Leave to Serve “John Doe” Summons relating to tax liabilities of U.S. persons who conducted transactions in a convertible virtual currency between the time period of January 1, 2013 through December 31, 2015.
The Government’s reasoning for bringing this litigation action in the Northern District of California was because Coinbase is headquartered in San Francisco. The IRS’s disclosed rationale for this commencement of litigation is they have reasonable belief that individuals currently being investigated have not been in compliance with the U.S. tax laws which require reporting of taxable income from virtual currency transactions between the time periods listed in the prior paragraph.
The court reviewed the Government’s petition and supporting documents and determined that the “John Doe” summons to Coinbase, Inc. should be granted since
1. The Government’s investigation is of an ascertainable group or class of persons,
2. There is a reasonable basis for believing that such group or class of persons has failed or may have failed to comply with any provision of any internal revenue laws, and
3. The information sought to be obtained from the examination of the records or testimony (and the identities of the persons with respect to whose liability the summons is issued) is not readily available from other sources.
Based on the above three-prong test, the Court ordered the IRS, through its Senior Revenue Agent David Utzke or any other authorized officer or agent, to serve an Internal Revenue Service John Doe summons upon Coinbase, Inc. At this point, Coinbase may challenge the Summons, but such success is remote.