How is that even a prediction?

> store the history of all Bitcoin transactions

Bitcoin conveniently does this for them

> and try to identify all wallet owners

That’s the headline here

> check if profits were reported and if taxes were paid

Which is the IRS’ job

The bitcoin blockchain does not keep a record of trades you make on Coinbase though.

I’ve got from good sources that in Canada the RCMP is (...was several years ago) already doing exactly this. And it’s very easy to do since the exchange in question requires ID to create your account.

>Which is the IRS’ job

Ever heard of the 4th Amendment?

Sure. And so has the IRS, which “persuaded a federal judge”, according to the article.

I guess they thought it was a reasonable request to get the data of the 25,000 US citizens who made significant profit with bitcoin in those years, when only a few hundred reported such earnings in total.

That's an estimate at best. How many if tbise who profitted actually cashed out?

It's not just a matter of tracking those that cashed out as taxes are on the net profits of individual trades. Even converting between coins (ex: sell BTC, buy ETH) is a taxable event.

Cross-referencing a public ledger is not an illegal search.

The 4th amendment does not prevent combing through public data (the blockchain), nor does it prevent going through due process to obtain data (the coinbase order).

I would say this a very natural and logical thing to do - with the blockchain storing the history of transactions for eternity, you just need to get some programmers to write some code to cross reference a few systems and leave it running for the years to come, catching people as soon as they make a single mistake. The business case and expected ROI for this project must be the easiest one any inspector ever had to write.

I suspect they'll be investigating the large players mostly. They don't like tax evaders, but they REALLY don't like big tax evaders.