A Washington Western District Court judge has rejected petitioner William Zietzke’s appeal to stop the U.S. Internal Revenue Service (IRS) from accessing his Bitstamp trade data. An IRS summons invoked Zietzke to file a petition to quash the tax agency’s investigation into his private accounts. Even though the presiding Judge John Coughenour believes the IRS summons is “overbroad,” he still denied Zietzke’s petition.
Also read: IRS Dispels Crypto Tax Confusion
Washington Judge Will Allow IRS to Summons Bitstamp Over a Customer’s Transactions in 2016
William Zietzke filed a motion to quash an IRS summons on June 27, 2019, and the Washington case was then in limbo up until November 25. Court filings detail that in 2016, Zietzke used the platform Turbo Tax and said he thought he made two major transactions by filing a capital gain for more than $100K. After the tax filing, he realized he made a mistake and amended the return. Only this time Zietzke claimed a $410 capital gain and the IRS countered the changes by initiating an audit into his financial affairs.
Zietzke explained that the transactions did not occur in 2016 and he only realized his mistake after his accountant started helping him prepare for retirement. According to the filing on November 25, Zietzke claimed to have only used crypto services like Armory Wallet for his personal holdings and companies like Purse.io and Coinbase. Despite the admission, during the audit, the IRS discovered Zietzke also used the exchange Bitstamp.
“The IRS learned that petitioner used Bitstamp to conduct at least one Bitcoin transaction in 2016. Upon learning of this transaction, the IRS issued a summons to Bitstamp,” the document details.
Zietzke believes that the Bitstamp summons infringes on his Fourth Amendment
