Judge Tells IRS to Narrow Summons on Cryptocurrency Exchange (1)

The IRS will be able to proceed with a summons on the cryptocurrency exchange Bitstamp—despite a taxpayer’s attempt to intervene—if it sufficiently narrows its request, a federal judge said.

“The summons requests information that is irrelevant to the IRS’s stated purpose of auditing Petitioner’s 2016 amended return,” Judge John C. Coughenour of the U.S. District Court for the Western District of Washington said in an order. “The summons is therefore overbroad.”

The judge’s stance is reminiscent of high-profile case involving an IRS John Doe summons on Coinbase Inc., one of the largest cryptocurrency exchanges. A court in 2017 approved the summons but forced the government to narrow its request.

The new case stems from the IRS’s decision in June 2018 to examine the 2016 return of taxpayer William A. Zietzke after he filed an amended return seeking a $15,475 refund for taxes paid on previously reported gains on his cryptocurrency transactions. During the audit the…