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IRS Demands Identities of All US Coinbase Traders Over Three Year Period (vice.com)
An anonymous reader quotes a report from Motherboard: In bitcoin-related investigations, authorities will often follow the digital trail of an illegal transaction or suspicious user back to a specific account at a bitcoin trading company. From here, investigators will likely subpoena the company for records about that particular user, so they can then properly identify the person suspected of a crime. The Internal Revenue Service, however, has taken a different approach. Instead of asking for data relating to specific individuals suspected of a crime, it has demanded bitcoin trading site Coinbase to provide the identities of all of the firm's U.S. customers who made transactions over a three year period, because there is a chance they are avoiding paying taxes on their bitcoin reserves. Coinbase has a total of millions of customers. According to court filings, which were first flagged by financial blogger Zerohedge on Twitter, the IRS has launched an investigation to determine the correct amount of tax that those who use virtual currencies such as bitcoin are obligated to pay. But according to the documents, the IRS is asking for the identities of any U.S. Coinbase customer who transferred crypto-currency with the service between 2013 and 2015. "The John Does whose identities are sought by the summons are United States persons who, at any time during the period January 1, 2013, through December 31, 2015, conducted transactions in a convertible virtual currency," reads a memorandum written by Department of Justice attorneys and filed on Thursday, November 17.
"Coinbase has a total of millions of customers."
This sentence really set off my annoyance sub-processor.
#DeleteChrome
Coinbase should be able to get this quashed.
If the IRS had evidence of a crime, they're allowed to get information to further identify the person who committed it.
If Coinbase had committed a crime, they're allowed to get information as to who else was involved in it.
However, to subpoena a list of all clients in a certain geographical area over a three year period is to presume them guilty and then look for the innocent. That's a classic fishing expedition, and the courts should disallow it.
I am not a lawyer. Consult lawyers for legal advice. This is simple common sense.
E
P.S. I know the IRS is powerful... but not ALL powerful.
because there is a chance they are avoiding paying taxes on their bitcoin reserves
What exactly is the federal tax on "bitcoin reserves"???? If you have cash money that you keep in reserve, there is no tax on it (assuming that you paid income tax on the original income). If there is actually no tax on "bitcoin reserves" as I believe, then this is an invasive fishing scam that improperly puts these bitcoin users in the position of being investigated just because they used Coinbase.
I'm an American. I love this country and the freedoms that we used to have.
Sounds like bullshit, but if it wasn't: Were you reporting your tips when you filed your taxes?
I reported the profitable sale of Bitcoin (that I had mined) in 2012 or 2013 or something. I reported it as "Sale of Bitcoin", I believe. I didn't try to deduct hardware or power costs used in mining.
A couple of years later I bought some more but ended up cashing everything out at a small net loss. I didn't report it as it was a net loss (I didn't try to deduct the loss either.)
I'm pretty "fuck the government" myself, but I still play by the (nebulous and stupid) rules. Assuming they win, I'm curious to see if the IRS tries to get at me for anything. It was very small scale and I actually paid my fair share in taxes, as far as I can tell.
The left wants to raise taxes because they think it will increase tax revenue.
The right wants to lower taxes because they think it will increase tax revenue.
When the hell did it become moral for a government to maximize tax revenue?
Its down right evil.
"His name was James Damore."
And that that was one of the main benefits of using it? I was always confused how on earth that was supposed to work. Comforting to see that the answer is apparently "it doesn't".
They are not taxing your reserves. They seem to be looking for (a) people who traded in bitcoins but didn't report the gain/loss and (b) people who sold goods/services and were paid in bitcoins but didn't report the income.
Bitcoin is as anonymous as you want it to be.
Exchanging it for fiat currency isn't.
So, I need to declare when I give property to another person on my W2.
Well, yes, but not on the W2.
Who pays the gift tax?
The donor is generally responsible for paying the gift tax. Under special arrangements the donee may agree to pay the tax instead. Please visit with your tax professional if you are considering this type of arrangement.
What is considered a gift?
Any transfer to an individual, either directly or indirectly, where full consideration (measured in money or money's worth) is not received in return.
What can be excluded from gifts?
The general rule is that any gift is a taxable gift. However, there are many exceptions to this rule. Generally, the following gifts are not taxable gifts.
Gifts that are not more than the annual exclusion for the calendar year.
Tuition or medical expenses you pay for someone (the educational and medical exclusions).
Gifts to your spouse.
Gifts to a political organization for its use.
https://www.irs.gov/businesses...
When bitcoin hit the scene years ago, I said that it was currency.
Got a lot of flack for that.
Then I said that as soon as it could be converted to real cash, it would be regulated.
I was wrong on the timing, but bitcoin is going to be another Paypal.
It little behooves the best of us to comment on the rest of us.
Given that these joker outfits that call themselves exchanges keep getting hacked ever other week
Well, say they get hacked every other week. I think this is quite the learning experience for those who pay attention.
So, you systematically evaded taxes for 5 years, and that makes you angry at the government?
According to Intuit, profit from selling BTC is taxed like income, holding BTC which is increasing in value is taxed as capital gains, and "earning" BTC through mining is taxed as revenue which can be offset by mining costs: https://turbotax.intuit.com/ta...
Well, the government looks at it like this: Together the 99% are a very rich group from whom it can extract a huge amount in taxes. Even if the amounts per person are tiny, given there are enough people to go after, the 'rewards' will be great.
And an additional benefit is that they don't need to go after their rich friends, who gave them their positions.
"Trump!!", the new Godwin.
I recall the IRS doing something very similar in Nevada (Reno & Vegas) back in the early 80's; before gaming was a nationwide phenomenon -- even Atlantic City didn't have casinos in those days. Blackjack dealers were (overnight) told the amounts of tips they were "estimated" to have made, and that they would have to pay taxes on those estimated amounts. "The IRS deals seconds" (Google or YouTube "dealing seconds" if you don't know what that is) was their rallying cry. Ronald Reagan was president, and all the air traffic controllers were out of work. The more things change, the more they don't.
holding BTC which is increasing in value is taxed as capital gains ...and like any other investment subject to taxation as capital gains, the tax isn't owed until the asset is sold and the gain is realized.
But the specific excuse for doing this mentioned reserves. They might as well just admit that they are on a fishing expedition.
I'm an American. I love this country and the freedoms that we used to have.
LOL. Not real smart, are you, uneducated milinial scum, you just ELECTED a populist, didn't you? Hope ya' choke on it.
Just hack into the IRS and erase their database and wipe out all records. Seeing how easily the OPM was hacked, this should not be that hard for a talented group.
If the IRS wants to operate outside the US Constitution and Rule of Law, then they abrogate the right to any protections provided under the law and are fair game.
Strat
Progressivism (aka US 'Liberalism'): Ideas so good they need a police/surveillance-state to enforce.
> Sounds like bullshit
Many people are having to subside on side hustles and tips if you're lucky. Sounds like you have no idea what being in the working class is like.
Often wrong but never in doubt.
I am Jack9.
Everyone knows me.
Who said Bitcoin was anonymous? If you read the FAQ that is the third question. No one knowledgeable ever said Bitcoin was anonymous.
But the specific excuse for doing this mentioned reserves. They might as well just admit that they are on a fishing expedition.
The slashdot summary phrases things as "reserves". The actually court document introduction focuses on tax avoidance. ... In order to identify taxpayers who have may have underpaid taxes associated with transactions in virtual currency, the United States brings this ex parte proceeding under 7609(f) and (h) of the Internal Revenue Code (26 U.S.C.) for leave to serve a John Doe summons on Coinbase."
"The IRS is responsible for monitoring ways in which United States taxpayers evade their United States tax obligations by concealing or otherwise failing to report their proper amount of taxable income and thus underpay their taxes
https://www.documentcloud.org/...
Don't have kids, and the roads where I am from are paid for out of my vehicle registration. I pay income tax, sales tax, government fees on my utilities that I pay for up front out of the money I already paid withholding taxes on, sounds like some serious double and triple taxation or outright theft.
errr....umm...*whooosh* *whoosh* Is this thing on ?
Is the IRS regularly does look at lots of financial records. Lots of entities report things about you to the IRS by law. Your W-2s? The IRS already has those, your employer sent it to them. Same with 1098s, 1099s, etc. You'll notice that they say something like "This is important tax information and is being furnished to the Internal Revenue Service." That means they are sending it to the IRS, as well as you. The IRS gets told about things like the interest you earn, and interest you pay, money you make, taxes withheld, and so on.
This is done for everyone. It is normal reporting, not an investigative thing. So the IRS doesn't ask banks/employers/etc for records on specific people, they are given records for all people, from all eligible institutions.
As such you can see why they'd think it might be reasonable to get information from a site that deals with financial transactions. Doesn't matter if you are doing transactions to magic Internet money any more than if it matters if it is transactions to stocks, options, or anything else.
How is it theft? Taxation is defined by law. If you think laws don't affect you, then the laws about property also don't exist, so you don't own whatever they are taking from you.
Taxation is defined by law.
So was slavery at one time, so were the horrors perpetrated in WW2 Germany, so were separate drinking fountains for whites and blacks. All legal, compulsory even, in many circumstances. Holding women as chattel is also legal in places in the ME, as is killing homosexuals.
I guess being legal makes anything OK then, right?
Or is it only as long as the laws comport with *your* views and biases?
Strat
Progressivism (aka US 'Liberalism'): Ideas so good they need a police/surveillance-state to enforce.
Whether something is "OK" and whether it is "illegal" are 2 different topics - the one at hand is whether Taxation is Theft, i.e. whether it is illegal - it isn't.
Bitcoin and other electronic currencies are "property" (see e.g. https://www.irs.gov/uac/newsro... )
Now the IRS doesn't automatically monitor all bank accounts: see e.g. here: http://peopleof.oureverydaylif... for
The IRS can however, force banks, foreign exchanges, and now electronic currency exchange houses, to disclose the identity of those engaged in transactions. It can do this to any individual or corporation if they decide to audit them: see here: http://www.libra.tech/blog/how... As far as I know, criminal law does not necessarily apply. A mere administrative decision to audit someone (could even be selected at random) is enough. See https://www.irs.gov/businesses... and here http://www.investopedia.com/as...
Of course, a complete regulatory framework for bitcoin and lookalikes hasn't yet materialised. According to this post: https://bitcoinmagazine.com/ar... it took about a decade to establish it for derivatives, so one might expect the same for bitcoin.
So what we see is the IRS seeing how far it can go, but they seem to have a very strong case. They're not auditing anyone in particular, but merely tracing a web of payments. Could be an audit. And consider the alternative. Suppose for example that bitcoin exchanges need not disclose the names of participants in transactions on request. You'd have an instant on-shore tax evasion mechanism ... and that is against the general thrust of tax law in general, not to mention common sense.
So I'm afraid the IRS will get its way ... and will go even further. Block chains are electronic records of transactions. Therefore potentially every last blockchain involving electronic currency transactions could become subject of disclosure to the IRS.
Whether something is "OK" and whether it is "illegal" are 2 different topics - the one at hand is whether Taxation is Theft, i.e. whether it is illegal - it isn't.
Wrong.
Theft can be legal or illegal, it's still theft. In WW2 Germany the jews had their wealth, property, and businesses stolen. It was theft. It was technically legal under the existing laws, but it was still theft.
The same as the genocide in WW2 Germany. It was legal, but it was still genocide.
Legal status does not make something right or wrong or change what it is. It simply allows or forbids it under the legal system.
Taxation IS theft, it simply happens to currently (and temporarily) be legal in the US. That legality can (and should, for a free people) be changed.
Strat
Progressivism (aka US 'Liberalism'): Ideas so good they need a police/surveillance-state to enforce.
At least as far as bitcoin is concerned.
Please do not read this sig. Thank you.
I bought a few thousand Dogecoins in the last five years.
How many dog treats do you think I owe the IRS?
Yes. The IRS likes their money now. See taxation of zero coupon bonds as one example.
The definition of theft is "an unlawful taking (as by embezzlement or burglary) of property". So no, just because you think taxation is wrong does not make it theft. If there is a law allowing it, then it is not unlawful. Therefore it is not theft.
I'm very curious as to how the incoming Republican Administration and Congress will respond to this demand for information.
Whatever you want to call it, it's obviously taking someone else's rightfully owned property without their permission. They (or someone who gave it to them willingly) have produced something of value and earned that wealth. To take it is wrong-- lawful or not.
The great German sociologist Franz Oppenheimer pointed out that there are two mutually exclusive ways of acquiring wealth; one, the above way of production and exchange, he called the "economic means." The other way is simpler in that it does not require productivity; it is the way of seizure of another's goods or services by the use of force and violence. This is the method of one-sided confiscation, of theft of the property of others. This is the method which Oppenheimer termed "the political means" to wealth. It should be clear that the peaceful use of reason and energy in production is the "natural" path for man: the means for his survival and prosperity on this earth. It should be equally clear that the coercive, exploitative means is contrary to natural law; it is parasitic, for instead of adding to production, it subtracts from it. The "political means" siphons production off to a parasitic and destructive individual or group; and this siphoning not only subtracts from the number producing, but also lowers the producer's incentive to produce beyond his own subsistence. In the long run, the robber destroys his own subsistence by dwindling or eliminating the source of his own supply. But not only that; even in the short-run, the predator is acting contrary to his own true nature as a man.
"No man's life, liberty, or property are safe while the legislature is in session." -- Judge Gideon J. Tucker
I think this is more about the IRS looking for people who have used the exchange of bitcoin (really, the sell) of either mined cones (in which case they would likely be responsible for income tax) or profit earned on the buy/sell similar to that of stock purchases, in which case they would likely be responsible for capital gains tax.
While I hope Coinbase is able to fight this, it's really not that much different than say Fidelity reporting your exchange activity. What is different, at least IMO, Coinbase (in this example) is acting more like a forex platform, exchanging USD for BTC, regardless of whether or not the BTC was recognized as currency at that time.
We'll see where this goes, but I think most of saw this coming as an eventuality once Coinbase started allowing people to cash-out in USD, the IRS had a tangible target to start collecting data from in order to start collecting taxes from the individuals.
-harryk
think before you write, it'll save me moderator points.
So you believe the bit about pulling people to a offsite location and telling them the IRS is going to go back on THEIR tax records 5 years to garnish some imagined top wages that may or may not have already been reported, and somehow quitting would solve it?
I wouldn't put it past a shitty manager to say that kind of shit, even off the record, but no one with a brain would believe it.
Actually, the court document focuses on tax evasion. The difference is huge - avoidance is legal. Evasion is getting paid in cash and never reporting it. Avoidance is getting paid by your employer, and maxing your 401k
Your ad here. Ask me how!
And it's assholes like you who refuse to pay your taxes that have me actually rooting for the IRS in this regard.
But, if you think that's bad, just wait until the IRS decides to charge tax on every bitcoin transfer. After all, they're public.
Your ad here. Ask me how!
Normally your broker would send you a 1099 on stock trades...that's fine, but now imagine your credit card sold off very small pieces of stock for every transaction. Now the IRS wants you to fill out that consolidated form 1099 with hundreds of transactions detailing everything you purchased so they can compare that to any capital gains/losses you might have made from buying the bitcoin at a higher or lower price than when you spent the coins... Ok, different example of how this is a disaster. Imagine you purchased Yen in 2014, but had a Yen credit card that automatically converted the Yen into Dollars. The Yen changed value compared to the Dollar over the past 2 years every second of every day. The IRS now wants your full credit card statement...just in case you made money in Dollars they could tax you on due to the exchange rate between Yen and Dollars. Now I'm going to have to do dozens of pages of paperwork and give the IRS detailed information on my daily purchases...ugh.
> Except you never consented to the contract. You were born. That is all.
That's false.
The contract IS the Socialist Slave Number, or Slave Identification Number.
In the US there is NO law that requires a person to have one.
-- Response from SSA to Mr. Scott McDonald, March 18, 1998 from Charles Mullen, Associate Commissioner, Office of Public Inquiries, SSA