Senior Republicans in Congress have stepped into the fight involving Coinbase and the Internal Revenue Service (IRS) by issuing a strongly-worded letter questioning whether the IRS has a strong foundation for amassing the records of half a million people.

The letter [PDF] from members of the Congress is regarding an ongoing dispute between the digital wallet provider and the IRS, which has demanded that Coinbase had over the information for all its users’ accounts.

Last November, the federal agency had issued a ‘John Doe’ summons to Coinbase to provide information on unnamed and unknown taxpayer(s). It was reported that the summons was dealt to help the federal agency’s investigation into possible tax evasion by users’ of digital currencies between January 1, 2013, through to December 31, 2015.

However, while a federal judge had approved the IRS summons last December, Coinbase have remained steadfast in their opposition of the summons. In March, the company said in an announcement that they had yet to over any records. In the same month, according to the IRS, they revealed that fewer than 1,000 people were declaring their Bitcoin profits or losses in their annual tax returns.

Following the approved summons, a Coinbase user then submitted a motion to block the IRS access to users’ information. This was followed up by a new motion from two unidentified Coinbase users earlier this month in a bid to prevent the IRS from accessing user data.

In this latest development, though, it’s likely to add further fuel to Coinbase’s case as it continues to block the demand.

In the letter from Congress, it states:

The summons is estimated to affect 500,000 active Coinbase customers and would result in the production of millions of pages of associated records, many of which contain personally identifiable information.

It adds that of that figure, 90 percent of customers had engaged in less than $10,000 in cumulative, gross transactions during the time period requested.

Echoing concerns from Coinbase and its users, the letter questions whether the IRS has ‘established a reasonable basis to support the mass production of records for half a million people,’ many of which don’t appear to be undertaking the volume of transactions that requires it necessary to report to the IRS.

Based on the information before us, this summons seems overly broad, extremely burdensome, and highly intrusive to a large population of individuals.

With several questions put to the IRS, members of Congress have asked the federal agency to get back by June 7. This will no doubt put increased pressure on the agency as it works to deal with Coinbase in an attempt to get the information it wants.

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