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Legal Sparring Continues in Bitcoin User's Battle with IRS Tax Sweep (fortune.com)
In a strange twist, Coindesk reports that the IRS has, somewhat indirectly, removed one target from its broad request for data about U.S. users of the Bitcoin exchange Coinbase. It no longer wants data about Jeffrey Berns, a lawyer who also happens to be fighting the IRS's "John Doe" request in court. From a report on Fortune: Berns originally filed a motion on December 13th asking the U.S. District Court for Northern California to stop the IRS' subpoena of Coinbase records. The IRS believes that its request, filed in November, is justified because Bitcoin owners "may fail, or may have failed, to comply with one or more provisions of the internal revenue laws." Berns is represented by his own law firm, Berns Weiss, whose motion argues that the IRS data search is "an abuse of process" and "overbroad." Berns has said his motion is intended to defend not only himself, but all targeted users. But according to a December 28th court filing by the IRS, Berns is no longer a target of its records request because he identified himself in his own filing, and the request is only for unidentified users. Therefore, the IRS argues, Berns is not a party to proceedings and his request to block the data grab should be thrown out of court. In response, Berns Weiss had its own spin, telling Coindesk that "The IRS's willingness to withdraw the summons as to Mr. Berns only because it is now aware of his identity," and without the additional information they're seeking about many other Coinbase users, "Makes it clear that the IRS does not have a legitimate purpose in seeking substantial personal and financial information concerning approximately 3 million Americans."
In U.S. law, only someone who is involved in the conflict may ask the courts to resolve the matter in a particular way. The IRS then essentially removed this lawyer from the conflict; because the lawyer no longer meets the requirements for participating in the matter, the IRS is asking his petition to the courts to be rejected.
Slick. And Stupid.
So the IRS's argument is that, as soon as someone identifies themselves by suing them to prevent this release of data, they'll remove that person from the data grab request so they no longer have standing to sue them, and get the case thrown out?
Hey America, there's this concept called 'justice'. You knew about it, once.
The IRS is seeking information on people with US tax obligations who may have profited from the sale/barter of Bitcoins, and failed to report that profit on their taxes. Now that they know the identity of this specific person, they no longer need his identity to be produced. That absolutely does not "make it clear that the IRS does not have a legitimate purpose" here.
Is illegal in this country. Sorry IRS, go F- yourself.
That someone "might do something wrong" is not a valid reason. If they win this, we are screwed. "show us your papers, and your wallet". You can say good bye to paper money too.
Tax value of all items at import terminal or manufacturer or distributor. No income tax, no property tax, no sales tax.
Stop harassing citizens and shaking them down for money.
Why is it any of their business what I do with my own money?
Of course, every search warrant ever, and every subpoena ever has been issued with assumed guilt? You're a fucking idiot. This is not a dragnet; it's subpoenaing records of financial transactions that were not reported to the IRS, from organizations that have been skirting a legal (and ethical) responsibility to report them. Let me give you a hint, if you reported the profit, there's not a problem at all here. However, if you're using bitcoins for money laundering or committing tax fraud, then you have a real reason to be concerned.
It's been very well demonstrated through the courts that financial transactions of this sort do not have a legal protection from taxation, and that these requests are completely legal. Just keep crying because you don't want to get caught for tax fraud.
farmed/bought bitcoin and then sold it for cash and you live in the US? Pay your feckin taxes on the profits and the IRS won't bother you.
"may fail, or may have failed, to comply with one or more provisions of the internal revenue laws."
Excuse me!? First off swap that out with any other situation such as "we need a search warrant to search all of the apartments in a building because one of them may have, or may soon commit a crime" and any judge in the US with their head screwed on straight would laugh it out of court. Secondly even the IRS has I believe admitted that the tax code is so insanely convoluted that not even they can truly define the legal bounds of the tax code. So not only are they asking for sweeping ability to search personal records but they can't even define what laws those people may or may not have run afoul of.
They're the color of SHIT!
If "black is beautiful" then I just shat out a MASTERPIECE!
And no warrants shall issue except upon PROBABLE CAUSE.
When your government has routinely violated the very Constitution under which it is supposed to operate,
and has been doing so for at least the last 15 years completely with rampant disrespect and wanton abandon,
and refusal to listen and correct its ways,
it is time for you to overthrow that government.
collecting taxes on bitcoin an illegitimate currency? all of a sudden its something they have a right to do that? i never gave them that right
Enough arguing over bitcoins on /. We need more news about the SCO vs. IBM lawsuit. The future of Linux is in the balance!
Saw that one coming. I believe that it's not the IRS that really wants this data, it's the NSA/CIA, but they can't ask for it. One can always tell when the government is up to no good by how fast they drop someone, or how fast they start with the "no standing" thing.
Necessity is the plea for every infringement of human freedom. It is the argument of tyrants; it is the creed of slaves.
1 in 100 Americans has not used Coinbase, I doubt its even 1 in 1000.
The IRS is trying the same legal tactic Wade tried in Roe vs Wade, when it said that Roe was no longer a party because she had given birth and was no longer pregnant to be a candidate to have an abortion. The Supreme Court disagreed.
Courts do revisit their interpretations and come up with new interpretations. Your absolutism is invalid.
Look, they're providing a money laundering service. It doesn't matter if you do that with a bank or an investment firm; you have to report the transactions to the IRS. Every other company in the US that's exchanging money has to report the transactions to the IRS. Remember that more of the constitution is about banking than any other thing. You have to pay your fucking taxes. The bitcoin exchanges are pretending that they don't have to comply with banking or investment law. They're wrong.
if you move money, you play by IRS rules. BTC must play by rules, now must tell IRS all money moves. no money games to hide tax fraud.
There, all in 5 letters or less. If you pretend to be a bank, report the transactions. Okay, so it's an investment? Play be investment rules. "because interwebs" isn't an excuse to hide tax frauds.
Sure, as long as all of you tax cheats are there with me. Fuck you. You want to steal from the masses while claiming that they're fascist. You're the fucking thief. Eat shit and die, you leech.
I disagree with the conclusion made by the OP about questionable purposes for the request for data. Any responsible body whose purpose is the collection of tax revenue would want to know the full picture of transactions as well. While it may be "burdensome" on the coin exchanges, the fact remains that no one forced them put up their exchanges without a proper mechanism for auditing. I support bitcoin use on multiple levels, but if they willfully setup an exchange to circumvent law, then they deserve to be rooted out along with the rest the weeds. No one wants to enable funding of terrorists or allow people/corporations skirt around the radar when it comes to who is funding whom when these transactions could be very non-trivial amounts of currency equivalents. This request could improve transparency many times over as more and more often bitcoins are being used ... it's not always to avoid transfer fees or other legit purposes. Folks could be funding their entire career by using currency that hasn't had ANY tax pulled, yet receive the same pitiful public services the rest of us are receiving. Requests like these should not be lumped together with the blanket John Doe cases against "pirates" since these senders/receivers have definable real people on both ends (no question of whose access point was hijacked unless was their full exchange altogether due to not using appropriate security measures)
to summarize what you said, basically you're suggesting that since they act like a bank, they should comply with banking law and report transactions over $5K and those transactions structured to avoid the $5K threshold. It's not actually that hard.
The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.
They're asking for the records of everyone who used the exchange, without evidence that any law has been broken. Why hasn't this been thrown out yet?
The thing is: These arguments apply equally well to any and all financial information that the IRS receives. Why should your employer be forced to tell the IRS what they pay you? Why should your bank be forced to supply the IRS with account information? All of this is only because the IRS doesn't trust you, the individual taxpayer, to properly file your taxes. It is *all* in violation of the 4th amendment, as far as I can see.
Enjoy life! This is not a dress rehearsal.
Anyone remember Mt Gox? It announced that around 850,000 bitcoins belonging to customers and the company were missing and likely stolen, an amount valued at more than $450 million at the time. Although 200,000 bitcoins have since been "found", the reason(s) for the disappearance—theft, fraud, mismanagement, or a combination of these—were initially unclear. New evidence presented in April 2015 by WizSec led them to conclude that "most or all of the missing bitcoins were stolen straight out of the MtGox hot wallet over time, beginning in late 2011." I think a Achilles heal with BT is always going to be the exchanges where it suffers the same weaknesses as bank faith currencies.
All our hard drives crashed and the tape backups cannot be found.