Recently, news erupted in the market that the revenue service of United States, Internal Revenue Service [IRS] will gain access to information about the cryptocurrencies held by US citizens and that this information is provided by three of leading cryptocurrency exchanges: Coinbase, Kraken and Gemini.
Additionally, Coinbase is no stranger to this as the exchange platform handed over the details pertaining to 13,000 users to the IRS last year in order to comply with a court order. The exchange shared details such as taxpayer ID, birth date, address, and historical transaction records of “higher transaction customers” between the year 2013-2015.
Crypto Tax Girl said on Twitter:
“For 2018, Coinbase, Kraken, and Gemini will be reporting to the IRS, so you may receive a 1099-K. A 1099-K doesn’t have any specifics about your transactions (like a 1099-B does), but it does signal to the IRS that you hold crypto.”
Kraken, the world’s largest Bitcoin exchange in Euro volume and liquidity, was quick to act on this allegation. The exchange platform stated on Reddit that they do not alert the IRS about the crypto held by its users. The support team further clarified that they do not send end-of-the-year statements to their clients and that the clients of the platform are responsible for their own reporting.
The exchange said:
“We cannot provide advice in relation to inquiry on taxes. (It is also probably not advisable to take tax advice from any reddit post or comment – and certainly not from twitter either, but you may wish to consult your own CPA, tax advisor, or tax attorney individually and privately.)”
They further stated users can export their data from Kraken, with the help of Export feature available on the platform for tax assessment or for any other purpose. This was followed by the support human stating that it was the user’s responsibility to determine whether taxes can be applied to their trades, which is executed on Kraken, and “report and remit the correct tax to the appropriate tax authority”. The support human further added:
“We do not send out end of year statements and we are not responsible for determining whether taxes apply to your trades or for collecting, reporting, withholding or remitting any taxes arising from any trades.”
PWPersion, a Redditor said:
“Good, the faster we have exchanges getting onboard with centralized entities the faster and harder people will work to make Decentralized Exchanges a thing, we need them sooner or later and if this does not light a fire under peoples asses then I do not know what will.”
Donkey786, another Redditor said:
“This was always going to happen to exchanges that want to operate legitimately in the US. There was no way the US would allow these exchanges to operate and let their customers not pay US taxes. Hell, the US forced Swiss banks to give up tax info.”
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Priya is a full-time member of the reporting team at AMBCrypto. She is a finance major with one year of writing experience. She has not held any value in Bitcoin or other currencies.