Fortune, Only 802 People Told the IRS About Bitcoin—Lawsuit:
The Internal Revenue Service revealed new details about its investigation into tax evasion related to bitcoin, filing court documents that suggest only a tiny percentage of virtual currency owners are reporting profits or losses in their annual returns.
The new documents, filed Thursday in San Francisco federal court, come in the midst of a closely-watched legal fight between the IRS and Coinbase, a popular service for buying and selling bitcoins that hosts over a million customer accounts. ...
While the lawsuit did not come as a surprise, a new affidavit from IRS agent David Utzke reveals additional information about how the agency is conducting the investigation. Specifically, Utzke explains he ran a computer analysis against the IRS's repository of hundreds of millions of tax records, and found fewer than a thousand people filed a Form 8949 to account for a "property description likely related to bitcoin."
Form 8949 is used to report capital losses and capital gains and, under current IRS rules, would require bitcoin owners to declare their profits. In some cases, the profit could be significant given the virtual currency soared from $13 to over $1,100 during the three year period (2013-2015) for which the agency is seeking information.
Here is a paragraph from Utzke's affidavit that states only 802 individuals filed a bitcoin-related Form 8949 in 2015 (emphasis mine):
The IRS searched the MTRDB for Form 8949 data for tax years 2013 through 2015. I received the results of those searches. Those results reflect that in 2013, 807 individuals reported a transaction on Form 8949 using a property description likely related to bitcoin; in 2014, 893 individuals reported a transaction on Form 8949 using a property description likely related to bitcoin; and in 2015, 802 individuals reported a transaction on Form 8949 using a property description likely related to bitcoin. ...
The upshot of all this is that many Coinbase customers are likely to feel uneasy since the investigation could eventually lead them to owe back taxes or penalties, or even see the IRS seize their accounts.