Bitcoin, feel like they know a bit too much.

its really a lot easier then it all sounds

By Nathaniel Popper, NEW YORK TIMES November 18, 2016

The tax agency sent a broad request Thursday to Coinbase, the largest bitcoin exchange in the United States, asking for the records of all customers who bought virtual currency from the company from 2013-15.

The document, a so-called John Doe summons, said that an IRS agent recently found three cases in which people were using bitcoin to evade taxes - two of which involved Coinbase customers.

The IRS said that those findings - and Bitcoin's relatively high level of anonymity - have led the agency to think that many more people are very likely using the virtual currency for similar purposes.

"The IRS not only has suspicion that the John Doe class includes U.S. taxpayers who are not complying with the law - it knows that the class in the past included such violators, and very likely includes others," the document said.

The summons comes shortly after the Treasury Department's inspector general issued a report chastising the tax agency for not taking more aggressive action to curb "unlawful activities by those who use virtual currencies."

“None of the IRS operating divisions have developed any type of compliance initiatives or guidelines for conducting examinations or investigations specific to tax noncompliance related to virtual currencies," the report, delivered in September, said.

The request this week would require Coinbase, a startup based in San Francisco with funding from several leading venture capital firms, to turn over the identity and full transaction history of millions of customers - it had about 3 million customers at the end of 2015. But the company is already gearing up to fight the request.

"We want to work with law enforcement - that's generally our policy. But we can't tolerate sweeping fishing expeditions," the company's head legal counsel, Juan Suarez, said Friday. "We are very concerned about the financial privacy rights of our customers."

The existence of the summons was reported earlier on Twitter by the financial blog Zero Hedge.