Digital currency exchange Coinbase has issued new comments in its ongoing dispute with the IRS.

The firm filed last week to officially respond to the so-called "John Doe" case instigated in November by the IRS, which is seeking to obtain three years' worth of customer records in a bid to catch tax cheats.

Specifically, Coinbase is asking that the court hold off a decision on a motion filed by one of its customers as well as the IRS summons itself, until March at the earliest.

Coinbase is also going public about how it believes the effort could cost much-needed time and resources.

Specifically, the startup said it may face as much as $1m in legal expenses as part of what it called "an extraordinarily broad" summons in last week's court filing. As CEO Brian Armstrong wrote in a blog post published over the weekend, this comes in spite of what he called the startup's cooperative track record when it comes to working with the IRS on its investigations.

Armstrong wrote:

Armstrong went on to advocate that the IRS use 1099-B, a tax form issued by brokers in the US that reports information on the sale of stocks and bonds, among other assets, suggesting that accepting data in this fashion could actually help the IRS in the long term.

Ultimately, he concluded, the case risks becoming a lose-lose situation for all stakeholders involved.

"A protracted legal battle, seeking to reveal private information from people who are not evading taxes, would be bad for Coinbase, the IRS, and many US citizens," he wrote.

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

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