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The request from the I.R.S. appears to be the most sweeping single effort to track down people using virtual currency to break the law. In the past, Coinbase has received narrowly tailored requests for information about customers, and generally complied, Mr. Suarez said, but never something as broad as the latest summons. Coinbase and other companies that buy and sell Bitcoins are required by regulators to record the identities of people who buy and sell virtual currency on their platforms. The underlying Bitcoin wallets, however, are tracked by a decentralized network of computers that generally do not record the identities of the people involved in transactions. A Bitcoin wallet looks like a series of random letters and numbers, and anyone can open one without providing their identity. The most famous early use of Bitcoin came on the Silk Road, an online site where users could pay for drugs with Bitcoin, with the understanding that their identity would never be recorded. The documents filed this week indicated that the tax agency was interested in going after both large tax evaders as well as small-time Bitcoin users who might not be recording their virtual currency transactions properly for tax purposes. The basic tax rules for Bitcoin users were set down by the I.R.S.
For the original version including any supplementary images or video, visit https://www.nytimes.com/2016/11/19/business/dealbook/irs-is-seeking-tax-evaders-who-use-bitcoin.html