On January 31, Coinbase, a digital currency wallet and platform based in San Francisco where merchants and consumers can transact with digital currencies like Bitcoin, Ethereum, and Litecoin, has issued a 1099-K tax forms and sent them to some of its clients in the United States.
In the United States, Form 1099-K "Payment Card and Third Party Network Transactions" is used to report payments received through reportable payment card transactions (such as debit, credit, or stored-value cards) or settlement of third-party payment network transactions.
According to Coinbase, the 1099-K form was sent to those clients who have processed more than 200 receipt transactions, or transacted more than $20,000 during past year, including the users of "business use" accounts.
We used the best data available to us to determine whether your account activity qualifies as Business Use, including but not limited to factors such as completion of a merchant profile or enabling merchant tools.
The move of Coinbase disappointed many clients of the exchange as they understood that their transactions history would be reported to the The Internal Revenue Service, which is the tax collection agency that administers the Internal Revenue Code enacted by Congress. Moreover, some customers have reported that the figures in the tax forms were higher than they expected.