The U.S. Internal Revenue Service (IRS) is taking a step back from its legal battle with bitcoin exchange Coinbase to assess if it needs to take additional action in the case.
New court filings obtained by CoinDesk showed that lawyers for the U.S. tax agency have asked the U.S. District Court for the Northern District of California to delay the hearing set for Feb. 16 until March 23 “because it is weighing whether to take additional action in the case.”
The hearing is for the petitions filed by Coinbase and one of its customers. The two parties wanted the court to formally intervene in their dispute of the legitimacy of IRS’ John Doe summons. If you recall, the California district court allowed the tax agency to require Coinbase to submit records of its customer transactions as part of an investigation into possible tax fraud committed by U.S. residents who engaged in business with or through the bitcoin wallet service.
Lawyer Jeffrey Berns, also a customer of the virtual currency exchange, challenged the order on grounds that the summons “would constitute an abuse of process” and described the IRS’s request to obtain the user records as “overboard.”
Now, the IRS is arguing that a hearing may prove to be unnecessary.
“The United States seeks this continuance not for purposes of delay, but rather because the United States is considering filing a petition to enforce or taking other action with respect to the John Doe summons and if more time is provided a hearing on movants’ motions may be avoided altogether, sparing the Court’s judicial resources and the Parties’ time and expense,” lawyers for the IRS said, according to the news outlet.
Coinbase has also asked the court to delay the hearing until March so the company will have enough time to prepare a proper response.
The San Francisco-based start-up, which has secured funding from several leading venture capital firms, was put under intense scrutiny after tax agents uncovered found three cases in which people were using Bitcoin to evade taxes.
Current bitcoin price
After several weeks of sleepy streak, bitcoin is finally back above the $1,000 mark. The popular digital currency traded at a high $1,020 early Friday morning.