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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!
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.
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.
Comparing a thorough taxman to the nazis shows that you have no grasp of history.
Stop trolling you fool. When Silk Road was closed, it barely made a dent in the daily crypto-currencies transactions. This is a well-known fact. You're just bitter than you didn't buy hundreds of Bitcoins in 2009.
#DeleteFacebook
"It's a strong indication that Bitcoin is mostly used for criminal activity."
Hardly. By that logic everyone using cash are mostly engaged in criminal activity. Day-to-day people just aren't thinking about everything in terms of taxes. Ted buys Joe lunch, it never even crosses Joe's mind to log the lunch and the amount so he can pay taxes on it later.
This is akin to the IRS announcing they've bought software to perform forensic analysis of lunch purchases because less than 300 people reported income from lunch gains in 2015. Hell, the IRS didn't even have rules that told you HOW to report Bitcoin as such in 2015 a lot of people who did some significant amount of trade likely did report but declared it via some other mechanism like capital gains or business income.
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.
Funny. A bunch of US dollars in one hand versus a bitcoin wallet address in the other - guess which one is earning me more right now? And no, financial instruments and investments are not USD.
Long signatures suck.
It scares you that officials seek to do their job effectively? What?
That's what tax officials do. They collect taxes that people owe. Some people, especially wealthier people and large corporations seek to use different mechanisms to avoid paying taxes that they legally owe. If tax officials allow this to happen, they're basically saying that tax evasion is fine at which point everyone with the money to hire a tax advisor/set up a shell company will stop paying taxes, and the entire tax burden will be left on those too poor to be able to use trickery to dodge taxes, which would be destructive to the entire society. There are those who argue this is in fact already at least partially the case seeing how little taxes many megacorporations pay to their respective countries, and seeing how abundant different sorts of tax-havens like Panama and the Caymans are.
Unless you yourself happen to be trying to use Bitcoin to dodge taxes, you should be in favor of this, because the more sucessfully people avoid taxes, the more the pool of tax paying citizens shrinks because tax-evasion, the more taxes you will pay.
No. Wanting to catch people who break laws does not make anyone a nazi. This is just as stupid as calling the police "the crime-Nazis" for wanting to apprehend criminals. Now you may disagree with certain laws and argue that said laws or said taxes should not be collected, but for that to happen you need to change the law, not point the finger the whoever is enforcing said law and break Godwin's law without clearly having even a modicum of understanding of what the word you're throwing as an insult means.
"It is the business of the future to be dangerous" -Alfred North Whitehead
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.
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.
Hi! I make Firefox Plug-ins. Check 'em out @ https://addons.mozilla.org/en-US/firefox/addon/youtube-mp3-podcaster/
On this planet's side.
Wait, no, he's parking it in some tax haven.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
When ransomware hits, it's also barely a blip on the total number and total amount of transactions. Dumbass.
#DeleteFacebook
Came to post something like this.
Anonymous currencies (which Bitcoin really isn't) and currencies not controlled by central banks (which Bitcoin is) are quite useful under authoritarian and/or despotic governments.
I expect Bitcion use to increase significantly in the USA over the next few years.
Have gnu, will travel.
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.
Close
Military. 28% of the budget
Paying back debt to social security 33% of the budget and rising
This is money the federal government borrowed in the 70'sand 80's from SS when SS had a surplus annually and is required to pay back. Ask the baby boomers what they spent this money on. They are responsible for spending it but are too stupid and selfish to pay it back.
Medicare 30%. Because everyone kept expanding services wile doing something stupid like prevent Medicare from negotiating rates to keep prices down.
My numbers might be off a bit but everything but those three total less than 10% of the budget. Welfare food stamps whatever add up to less money than the annual budget deficit.
Lastly the annual budget starts in a deficit. The USA received 3.5 trillion in income(taxes) annually but budgets for 4 trillion in spending ( that was 2014 I think).
You want to control government spending. A simple ke would do wonders. This years budget equals last years revuene.
That won't solve all the issues but it solves the longest standing one is that they always assume 10% growth in revuene. Something like 40% of the national debt is from just that. Another 30% is debt owed to SS
i thought once I was found, but it was only a dream.
There is no reason to allow someone to moderate in a discussion and then post anonymously. That's a bug - one that can be easily fixed. It's also dishonest. Then again, most logged-in users hide behind nyms anyway, so they're more like "semi-anonymous cowards."
Now back on topic. The bitcoin chain holds a record of every transaction. The IRS shouldn't have too hard a time now going back over years of transaction records. There's the flaw of bitcoin - if anonymity is broken, every transaction is on record, not just the most recent activity. And for bitcoin to work, every transaction needs to be recorded. And if history has taught us anything, it's that any encryption can be broken given enough resources and motivation. Just more proof that those who don't learn from history are doomed to repeat it, I guess.
"Transparent" is a shit show that trades on every stereotype going. A man in drag is NOT a transsexual.
Except that logged-in trolls are easy to spot, and down-modding them reduces the number of posts they can make to 2 per account per day - and if suddenly the same IP address is used to crap-flood, it's easy enough to ban.
Now if you REALLY want to clean up things, have validated accounts with a real identity behind them. Sure this won't stop crap (it doesn't on sites like facebook or twitter), but eventually the shit will hit the fan, because the Internet never forgets. Enough people lose job opportunities for being assholes, it will sink in.
"Transparent" is a shit show that trades on every stereotype going. A man in drag is NOT a transsexual.
plain site or plain sight?
learn english!
He meant "plane site." He's investing in a web site devoted to powered flight. :-)
"Transparent" is a shit show that trades on every stereotype going. A man in drag is NOT a transsexual.
There is no reason to allow someone to moderate in a discussion and then post anonymously. That's a bug - one that can be easily fixed.
Checking the "Post Anonymously" box is equivalent to logging out and then posting. This can also be achieved by loading the discussion in a private browser tab. So you have your reason : the workaround would be trivial.
Now back on topic. The bitcoin chain holds a record of every transaction. The IRS shouldn't have too hard a time now going back over years of transaction records. There's the flaw of bitcoin - if anonymity is broken, every transaction is on record, not just the most recent activity. And for bitcoin to work, every transaction needs to be recorded. And if history has taught us anything, it's that any encryption can be broken given enough resources and motivation. Just more proof that those who don't learn from history are doomed to repeat it, I guess.
Anonymity never was a design goal for Bitcoin. It is just that the system doesn't requires personal information to function. And the crypto behind Bitcoin is pretty solid, AFAIK it is even quantum computer proof. And should the current algorithms break, it would be possible to update the protocol.
Yes, you would. It's called capital gains... I assume the IRS would consider BTC an investment, rather than earned income. The capital gains tax rate is actually lower than earned income.
So you should've paid tax on the earned income of $7 (since you worked for that) in 2010/2011 (which would've been $0). Then you'd have a cost basis of $7. If you sold that 1 BTC 9possibly wrong assumption) for $4000, the capital gains would be $3993, for a tax of $598.95 (15%) assuming you make more than $37,950 filing as a single individual...
The problem is that just because you cash it out, doesn't mean you spend it, but it does mean you now have that "income" available to you. If the US were to tax based on spending, it'd have a nationwide sales tax (which is considered regressive) rather than an income tax.
The boomers really didn't get much power until later than those years you listed. Look at the age of politicians and then look at the birth years for the boomer generation.
"So long and thanks for all the fish."
"It's a strong indication that Bitcoin is mostly used for criminal activity."
Hardly. By that logic everyone using cash are mostly engaged in criminal activity.
Based on civil assets forfeiture, that is the logic being used by the government.
Come on, there are plenty of ways to track people who aren't logged in. Or are you that new to this / that naive?
"Transparent" is a shit show that trades on every stereotype going. A man in drag is NOT a transsexual.