A California federal judge on Wednesday handed the Internal Revenue Service a partial win in the agency’s bid to seek records from Coinbase Inc., saying the virtual currency exchange must begin to hand over account information. This Coinbase info, however, will only be on transactions of greater than $20,000. In an order, U.S. Magistrate Judge Jacqueline Scott Corley said Coinbase must provide the taxpayer ID, name, date of birth and address for the accounts, but not copies of passports, driver’s licenses, wallet addresses and public keys for accounts because they were not relevant for investigating tax delinquency among account holders. “The summons as narrowed by the court serves the IRS’ legitimate purpose of investigating Coinbase account holders who may not have paid federal taxes on their virtual currency profits,” Judge Corley said. The opinion said the government met its minimal burden to show the narrowed summons serves a legitimate purpose to investigate “the reporting gap between the number of virtual currency users Coinbase claims to have had during the summons period” and “U.S. bitcoin users reporting gains or losses to the IRS during the summoned years.” But other requests were not relevant to achieve the government’s purpose, Judge Corley said. As such, the judge denied the petition to enforce documents seeking know-your-customer diligence; agreements or instructions granting a third-party access, control or transaction approval authority; and certain correspondence between Coinbase and the user or any third party with access to the account. The court originally granted the IRS summons request in November 2016, but Coinbase refused to comply, according to court documents. The IRS then submitted a narrowed summons request for accounts with transactions greater than $20,000. According to Coinbase, the narrowed summons requests information for 8.9 million transactions and 14,355 account holders. A representative of a Coinbase user said the narrowed summons covers only about 3 percent of Coinbase customers and the judgment will not permit the IRS to obtain information from a John Doe summons in the future. “While we remain concerned that the bar for the IRS to obtain taxpayer documents from third parties through a John Doe summons has been set too low, we are pleased that our efforts, and those of Coinbase, enabled Coinbase customers to achieve an important partial victory in this matter,” said Berns Weiss LLP partner Lee A. Weiss, who represents John Doe 4. “Instead, the court stated that if the IRS believes that it requires additional information concerning a particular Coinbase customer, it should issue a summons to Coinbase relating only to that customer and provide the required notice to the customer,” Weiss told Law360. “We are extremely proud of the result that we helped to achieve by standing up for the rights of Coinbase's customers.” Jim Harper, vice president of the Competitive Enterprise Institute, which supported Coinbase, said Judge Corley was kind to the IRS in finding the summons was not an abuse of process. Harper said Coinbase announced it will give affected individuals notice before their information is shared, which will give users the right to object. “One thing this case has revealed is that the ‘John Doe’ summons may have due process problems,” Harper said. “At the time it was written, notice to affected parties would have been very burdensome. But with the availability of email notice, using the John Doe summons without alerting the affected parties quite likely violates due process.” Coin Center, a nonprofit focused on the policy issues facing cryptocurrencies that had joined the Competitive Enterprise Institute in supporting Coinbase, said in a statement Thursday it was disappointed by the decision. Brian Klein, chair of the Digital Currency and Ledger Defense Coalition, said, "Although the DCLDC, which filed an amicus brief in support of Coinbase, takes some satisfaction in the fact that the court dramatically narrowed the scope of the IRS’ summons, the entire summons should have been quashed." The government declined to comment and generally does not opine on pending litigation. Representatives from Coinbase declined to comment. The government is represented by David A. Hubbert, Jeremy N. Hendon, Amy Matchison, Brian J. Stretch and Colin Sampson of the U.S. Department of Justice. Coinbase is represented by Steven A. Ellis, Grant P. Fondo and Shauna E. Woods of Goodwin Procter LLP and its own Michael T. Lempres and Juan A. Suarez. Competitive Enterprise Institute is represented by its own Theodore H. Frank, Jim Harper, Hans Bader and Sam Kazman. Coin Center is represented by Hartley M. K. West, Benjamin J. A. Sauter and Beau D. Barnes of Kobre & Kim LLP. John Doe 4 is represented by Jeffrey K. Berns, Albert G. Lum and Lee A. Weiss of Berns Weiss LLP. The case is United States v. Coinbase Inc. et al., case number 3:17-cv-01431 in the U.S. District Court for the Northern District of California. The above was first reported by Law360.