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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.
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.
None. They only care what you do with *their* money.
"Your money." My sides!
Have gnu, will travel.
"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.
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.
Bitcoin is a form of asset. Just like shares of stock, you are supposed to pay capital gains tax on the difference between purchase and sales price. It's how our government profits from the asset inflation that they themselves cause.
Have gnu, will travel.
Enough arguing over bitcoins on /. We need more news about the SCO vs. IBM lawsuit. The future of Linux is in the balance!
Did you use any infrastructure at all to make money? Like roads? Bridges? Encounter any traffic lights? Did you have workers that needed food? Hospitals? Did your valuable income need protection from someone? Did you have business disputes that you want a judge to reside over? And do you think judges are items you can just buy? Did you want a building for your office that didn't come down in the first week, because inspectors made sure it adhered to the building codes? Did you like the wiring in the building? Did you feel safer, knowing there was a fire brigade in the beighbourhood? And that if you fell ill there was an ambulance nearby? Did you like the fact your employees got an education? Or yourself?
Let's make a deal: you stop paying taxes, and you also stop using anything that was paid for by taxes. I'm fine with that. Have fun in your cave.
Therefore, by the (faulty) logic you're using, you're just a cow with a keyboard - osu-neko (2604)
[sarcasm]
Let's make a deal: you stop paying taxes, and you also stop using anything that was paid for by taxes. I'm fine with that. Have fun in your cave.
Donald Trump doesn't pay taxes, why should I?
[/sarcasm]
If you want news from today, you have to come back tomorrow.
"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"
Kindly explain how that is compatible with a request for data not specific to a particular person, place, and objective of the search?
It's accounting.
It's also how we stop the 1% from hording all of civilizations wealth in assets robber baron style and putting the breaks on all human progress for the sake of their rapacious greed. I know that Cardinal Richelieu quote is all the rage but here's another one: Never ask a man how he made his first million.
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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.
It's also how we stop the 1% from hording all of civilizations wealth
Not really. "The 1%" have a number of allowances and deductions available to them to mitigate the impact of cap gains taxes. These taxes serves mainly to keep you and I from reaching the 1% group and ensure that we continue working as wage slaves.
Have gnu, will travel.
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.
I think a "beighbourhood" is Justin Bieber's Neighborhood.
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.
"Of course, every search warrant ever, and every subpoena ever has been issued with assumed guilt?"
This is not a search warrant, a search warrant must be specific and name a specific target and what they hope to find. It is supposed to require probable cause a justice believes sufficient to indicate the warrant will enable law enforcement to find the evidence they seek. The bar is much lower than beyond a reasonable doubt but there is a bar.
This is, hey give us all your records just in case there might be something in there somewhere that suggests someone might have done something even though we have no idea who that might have been, what they might have done, or even a reason to think anyone did anything at all.
The tax cheating you should be concerned about is generally labeled by the IRS as "tax planning."
"None of the exchanges report income in 1099's or as financial transactions, so they're either blatantly, flagrantly violating securities laws (oh yeah, they're selling securities without license to non-accredited investors) or they're violating money laundering laws by exchanging currencies (you do believe bitcoins are a currency, don't you?) without reporting to the IRS under money laundering laws."
Incorrect, Coinbase does report. This is from the period of time before it was legally ruled that bitcoin exchanges counted as money exchanges and needed to do so. The IRS also had not made a determination during this period. People who utilized and exchanged virtual currencies who did report to the IRS had to make something up to put it under and how they did so could have drastic repercussions to tax rates. A bit part of the issue here is the IRS is trying to apply later determinations retroactively.
"The exchanges have reported publicly some number of users, and if the net number of users to reported exchanges is significantly less than the number of entities reporting capital gains, then there's probable cause to believe that tax fraud is occurring in bitcoin earnings."
Not at all, large numbers of users may have suffered a net loss in which case there is no penalty for not reporting and certainly not tax fraud.
"Either the bitcoin is a good to be sold or exchanged, in which case it's liable to sales tax, and clearly tax fraud has been occurring"
Actually all sales which are covered federally fall under interstate commerce and are exempt from sales tax. The IRS has zero authority to collect or police anything but income tax.
There is no federal sales tax, so it's not an IRS matter. It's between the buyers and their respective state governments (only some of which have an applicable tax).
" If they're doing no wrong,"
Therein lies the crux of the problem the IRS is demanding history on users during the period before "right" had been determined. Bitcoin users were required to guess what to do. This is akin to determining traffic cams will constitute sufficient cause to punish jay walking and then demanding the footage from the past five years to retroactively punish... and given the way the IRS operates to assess penalties for being late paying the fines on the retroactive citations.
Lets stop pretending this fishing expedition to retroactively punish people who used bitcoin before there were rules regarding how they should "pay [their] feckin taxes."
Unless of course you still pay sales tax when you buy something and property tax... then you are entitled to everything you mentioned above since they are all funded with state level taxation and not federal tax.
Okay, come back an explain how Warren buffet makes tens of billions then pays 15% on only $30 million of it so he can claim he has a 15% effective tax rate while I don't make even one million and pay 20+% on all but maybe 10% of it.
Also forget the 1%, that is a very carefully chosen category so it includes those who have worked hard to earn more than others and includes doctors, lawyers, and engineers. It is the 0.1% by wealth who have 40% of our nations wealth and continue to do so year on year so they are gaining 40% of the wealth we produce each year. We need them to stop getting more than 0.1% of new wealth and start paying their fair share.
They can and do report. This request is for the period of time before questions of the status of virtual currency and how and if it qualified to taxation were determined. This fishing expedition is so the IRS can retroactively apply those determinations on everyone they left to guess in the meantime. If they succeed they'll not only tax anyone who guessed wrong but apply retroactive penalties as well.
Neither did Tim Geitner.....and he became the Secretary of the Treasury!
All our hard drives crashed and the tape backups cannot be found.