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IRS Now Has a Tool To Unmask Bitcoin Tax Evaders (thedailybeast.com)
SonicSpike shares a report from The Daily Beast: You can use bitcoin. But you can't hide from the taxman. At least, that's the hope of the Internal Revenue Service, which has purchased specialist software to track those using bitcoin, according to a contract obtained by The Daily Beast. The document highlights how law enforcement isn't only concerned with criminals accumulating bitcoin from selling drugs or hacking targets, but also those who use the currency to hide wealth or avoid paying taxes. The IRS has claimed that only 802 people declared bitcoin losses or profits in 2015; clearly fewer than the actual number of people trading the cryptocurrency -- especially as more investors dip into the world of cryptocurrencies, and the value of bitcoin punches past the $4,000 mark. Maybe lots of bitcoin traders didn't realize the government expects to collect tax on their digital earnings, or perhaps some thought they'd be able to get away with stockpiling bitcoin thanks to the perception that the cryptocurrency is largely anonymous.
"The purpose of this acquisition is to help us trace the movement of money through the bitcoin economy," a section of the contract reads. The Daily Beast obtained the document through the Freedom of Information Act. The contractor in this case is Chainalysis, a startup offering its "Reactor" tool to visualize, track, and analyze bitcoin transactions. Chainalysis' users include law enforcement agencies, banks, and regulatory entities. The software can follow bitcoin as it moves from one wallet to another, and eventually to an exchange where the bitcoin user will likely cash out into dollars or another currency. This is the point law enforcement could issue a subpoena to the exchange and figure out who is really behind the bitcoin.
"The purpose of this acquisition is to help us trace the movement of money through the bitcoin economy," a section of the contract reads. The Daily Beast obtained the document through the Freedom of Information Act. The contractor in this case is Chainalysis, a startup offering its "Reactor" tool to visualize, track, and analyze bitcoin transactions. Chainalysis' users include law enforcement agencies, banks, and regulatory entities. The software can follow bitcoin as it moves from one wallet to another, and eventually to an exchange where the bitcoin user will likely cash out into dollars or another currency. This is the point law enforcement could issue a subpoena to the exchange and figure out who is really behind the bitcoin.
How dare the little people!??? Only corporations who purchased the proper politician get to evade their personal responsibility.
and now the IRS scammers will ask for bitcoins
Certainly not all people trading in bitcoin are based in the USA and owe taxes to the IRS!
How about we get rid of monderators, who don't actually contribute anything to discussions about stories. Most moderators are abusive, censoring posts they don't agree with, and using it as an agree/disagree vote rather than its intended purpose. Furthermore moderators don't post in stories because it will undo the moderation. This is necessary to prevent additional abuse beyond what is already rampant, but the solution is to eliminate moderation altogether.
The IRS scares me. They will stop at nothing to get every last penny in taxes owed by everyone. Their basically tax-Nazis.
Bitcoin has a permanent log of all transactions going back to the very beginning. The log never goes away.
As soon as a single trasnaction become tied to a real person then every transaction ever made by the person is exposed.
Bitcoin is not anonymous. Never was never will be. Using for that purpose = fool. There are other cryptocurrencies designed for anonymous, bu tthey are not as popular so also not as useful.
They hide their money tax free in plain site - by the hundreds of billions lol... Good old mr timmy cook has dun cooked the books folks!
It's a strong indication that Bitcoin is mostly used for criminal activity. Although the IRS wants you to declare earnings from illegal activity, there is some question as to whether the information is shared with other agencies. This discourages those people from reporting those earnings to the IRS. I agree that the number of people using Bitcoin is likely much higher, but this is a clear sign that most Bitcoin transactions are related to criminal activity. And this is precisely why Bitcoin should be banned.
802 people reported Bitcoin profits and losses. That is probably a significant percentage of people that had enough usage of Bitcoin to even report. I know a lot of people use bitcoin, but I seriously doubt most people usage of Bitcoin warrant reporting on taxes.
And, in other news, /., a site promoting news for (technical) nerds, pushes some 'fix' which borks the comment counts on m.slashdot so the counts all show zero.
Awesome.
USD for winners.
To be brutally honest, the types of transactions that most people make with Bitcoin (drug buys, money laundering, etc) aren't exactly the ones you want to report to the government. If they were dumb enough to report those to the IRS, they'll have problems worse than tax evasion to worry about.
I wouldn't bet on that. Tax evasion is how they put Al Capone in prison. If you look on line 21 of the standard 1040 form you will see it says "Other income. List type and amount". It may as well say "report earnings from illegal drugs and other crimes here". This is where they get drug dealers because ANY income has to be reported by law, whether or not it was legally obtained. So if you don't report the earnings from drug deals (or any other crime) they bust you for tax evasion even if you manage to avoid prosecution for the crime itself.
Being a buyer doesn't really save you either. Use taxes, sales taxes, excise taxes, and more can all apply depending on what state you live in.
There are some interesting fifth amendment constitutional law issues regarding mechanisms used to collect taxes on illegal drugs. In some cases reporting drug earnings can violate your rights against self incrimination depending on how it is done.
Fuck you. Taxation is theft.
If you don't want to pay taxes go live in somewhere where you don't use any of the benefits of paying taxes. No rule of law, no police or other first responders, no roads, no military, no contract enforcement, no judicial system, limited health care, no public education, no science research, no parks, no vaccines, no space program, no internet, no food safety, no drug safety, etc. If you want to live in a civilized society shut up and pay your taxes and stop selfishly whining about it. You benefit from the results too. Taxes are only theft in the minds of stupid and selfish people.
official government policy.
It's been said before: BitCoin is not anonymous. That's not even part of the design: by definition, the blockchain makes all transactions fully traceable. The only anonymity is one of obscurity, and the IRS software does not address this: how do you map a BitCoin address to a particular person.
If you have that information, however, then BitCoin is fully open, and transactions are fully traceable. Even the "mixers" are just a stupid game that serve little purpose other that to impose a fee on people with guilty consciences.
If you want anonymity, you need something like Monero. I'm wondering how long it will take for governments to start trying to make anonymous currencies illegal. After all, if you have nothing to hide, you should be happy to publish all of your financial details for all the world to see /sarc
Enjoy life! This is not a dress rehearsal.
If I had an AI that level-up'd a bunch of WoW accounts and then I traded these accounts for physical goods, how much should I be taxed?
If I decided not to pay the local mobster the "protection" money he thinks he's owed, am I breaking the "law" or standing up to crime?
Why aren't all forms of currency accepted everywhere?
Every currency-currency, currency-commodity, or commodity-commodity transaction is a gamble; you hope that what you receive will appreciate better than what you departed with. Sometimes the value of an item is worth what it means to you and sometimes it is worth what you think it means to others (for further trading). I think it's good for the Federal Reserve to have some healthy competition: whichever currency fucks their users the least will be adopted or the biggest fuckers will have to change their game plan to compete.
and good enough is often if not always good enough. Bitcoin just needs to be one stop on the road to money laundering. The goal isn't to be perfect, it's to make a trail hard enough to follow that it's not worth the effort. Kinda like a password. In theory you could guess any password given enough time but in practice you can't.
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No one likes paying taxes, so any time the IRS figures out how to track income or close a loophole, there's bound to be lots of grumbling. The only tax that the IRS is pretty much guaranteed to get is the tax on W-2 income and investment capital gains due to automatic reporting. Everything else can be gamed. Large companies purchase tax loopholes by buying politicians and accounting services, and there's not much that can be done about that. Small companies are basically free to report what they want to report, and they just roll the dice and hope they don't get audited.
If you're a government agency that everyone hates, and never get adequate funding because of it, you're not going to have the resources to go after every small-time Bitcoin miner out there. The IRS can only afford to audit a tiny percentage of taxpayers every year. So naturally, they're going to go after the big fish. They'll concentrate efforts on all-cash businesses, high-wealth individuals and companies that are reporting classes of income and deductions that are frequently gamed. In my opinion, this Bitcoin thing is no different than the IRS going after wealthy people and companies who are stashing their income in tax-friendly offshore accounts. If you've made a couple grand in Bitcoin speculation, that's very different from someone using it to launder all their business profits for the year. It's just another tool for them to use to go after people that they would otherwise target...they're not going to audit an individual for a $200 charitable donation unless it's one of the small number of random audits they do.
If you want to avoid taxes, go open a deli or pizza place -- I guarantee the ones near me pay almost nothing in taxes because on paper they have a very meager income. Or, just start your own small business one-person corporation and funnel all of your personal expenses through it. Business owners don't personally own their house, cars or other possessions -- their company does, and uses the purchases to offset income. Wage-earners are the only ones paying the official tax rates because of it.
The US had all this aplenty before introducing Federal Income Tax. Today all of those things you list take but a small fraction of the federal budget combined — the rest is consumed by the pseudo-charities like Medicaid.
None of this requires taxation — confiscation of money at the point of a weapon.
Irrelevant.
Yes, the smart people realize, they aren't merely theft, but an outright armed robbery.
In Soviet Washington the swamp drains you.
Is it a currency or is it more like a stock - do you only count a profit/loss when you sell it?
Disclaimer: I own bitcoin. I got them in the early days around 2010-2011 when mining with a personal rig at home was still worth it. The bitcoin price around the time that I got them was around $7. Then it got increasingly difficult to mine, and I stopped. I keep my bitcoin in my own wallet, and I never put them on any "exchange". At the time it was ridiculous to think of declaring them, since the total value was below $50 and there was no mechanism to declare them either.
I still have those bitcoin. But with increasing talk of taxation and spy tools like those talked about in the OP, I'm now scared of using them. And the reason is, I think that if I were asked to pay taxes on them, I would have to pay taxes at the current rate of $4000 per, instead of the value at the time when I acquired them of $7. Taxation of income should be at the time you make the income, not the time that you spend it. But I'm pretty sure that's not how the IRS would interpret it.
Hell yeah! Now if you'll excuse me I have a torrent to download.
All bitcoin is is a means to convert electricity into fiat money. Kind of silly to be taxing electricity.
should be this Con Artist.
The SEC and CFTC need to investigate Trump et al.'s insider trading given the daily flow of his insane tweets, statements, and brainfarts.
Yours In Finance,
K. Trout
The market cap for bitcoin is 70 billion (worldwide). Lets put that into perspective... the market cap for Apple is 815 billion. I would assume only a fraction of that 70 billion is held my US residents, lets say its half to be generous. Even if they collected all the potential tax on that 35 billion, you are looking at a whopping $10-12 billion payday.
And what percent of that do you actually think they will get? Maybe 10%, 20% if they are lucky... and just think of the time/training/effort/money involved in achieving that $1-2.4B.
It just doesnt sound worth it to me. Can you imagine training IRS auditors on blockchain tech.. LOL. Teaching them how to track down the user behind the address? How will they know it belongs to a US person? Just because it hits a US exchange? This is the whole Poloniex lawsuit all over again.
More than anything, its probably just scare tactics into getting more people to file bitcoin gains on their return.
Crypto currency was utilize to anonymize your use of "currency". Now that there is a tool for revealing your anonymity, the only way to go is one more layer in: by employing another crypto currency. Perhaps all those doge coins or Coinyes that people have stocked piled could now be used for moving crypto currency around now that Bitcoin has popular and "the man" has caught on.
Long live Coinye.
Long live fish sticks.
USA actually have rule of law that makes sense, police that doesn't shoot you, roads without pothole, military that protects instead of shoot people, contract enforceable without loophole, judicial system that's not corruptive, parking space in cities, free vaccines, free internet, food safety and drug safety? Wow, all those past news articles about USA must be fake news!