The Internal Revenue Service has signed a contract with a company called Chainalysis that offers software for analyzing and tracking bitcoin transactions.

The IRS has been pushing for ways to tax bitcoin transactions. In 2014, it issued basic guidance in Notice 2014-21 stating that virtual currencies such as bitcoin should be treated as property rather than currency for tax purposes. However, the IRS found that only a little over 800 taxpayers declared either losses or profits in bitcoin in 2015. The agency suspects that bitcoin and similar digital currencies are being used for tax evasion. It filed a broad request known as a John Doe summons last November seeking the identities of users from Coinbase, one of the largest bitcoin exchanges in the U.S. But after coming under pressure from members of Congress, the IRS scaled back the request in July to Coinbase users who engage in transactions of $20,000 or more (see IRS scales back Coinbase investigation).

Nevertheless, the IRS recently signed a contract with Chainalysis to track and analyze bitcoin transactions through the company’s Reactor tool, according to a report last week in the Daily Beast. The contract is only for $13,188, however. Posted an Article:

IRS Blinks in Bitcoin Probe, Exempts Coinbase Transactions Under $20,000

The Internal Revenue Service is significantly scaling back an investigation into customers who bought and sold bitcoins on the popular digital currency exchange Coinbase.

Instead of asking Coinbase for a long list of details about its customers who bought or sold bitcoin between 2013 and 2015, the IRS told a federal court it is now seeking information only for those accounts that engaged in transactions worth $20,000 or more.