Congressional leaders want answers about the Internal Revenue Service's ongoing effort to obtain user records from digital currency exchange startup Coinbase.

In a letter dated 17th March, Senator Orrin Hatch, along with Reps. Kevin Brady and Vern Buchanan, took aim at the IRS, questioning the basis of its investigation and requesting information about its broader strategy on digital currencies. The letter was addressed to IRS commissioner John Koskinen.

Hatch is the chairman of the Senate Finance Committee. Brady is the chair of the House of Representatives Committee on Ways and Means, while Buchanan leads that body's Oversight Subcommittee.

The three wrote:

The move comes months after the IRS sough to to compel Coinbase to produce the records, a court effort that began in November. At the time, the IRS said it was seeking information about the startup's bitcoin customers as part of an effort to prevent potential tax avoidance. The IRS declared digital currencies a taxable form of property in 2014.

Since the IRS first went to court, both Coinbase and one of its customers moved to stifle the effort. The tax agency later asked another judge to approve its initial summons, and earlier this week, a pair of Coinbase customers (who are seeking anonymity) asked a federal judge in California to halt the tax agency's summons.

According to the letter, the three members of Congress are seeking info about the IRS strategy on digital currencies – which its own watchdog has criticized as deficient and in need of an overhaul – as well as the justifications for its effort against Coinbase. The group said it wants answers before 7th June.

Notably, the three also asked whether the IRS would take a more hands-off approach to digital currencies in order to facilitate adoption.

"Will the IRS consider a de minimis exemption or other action to remove practical obstacles to such moderate, transactional use of digital currencies?" the letter stated.

Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Coinbase. 

Congress image via Shutterstock