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Coinbase Ordered To Report 14,355 Users To the IRS (theverge.com)
Nearly a year after the case was initially filed, Coinbase has been ordered to turn over identifying records for all users who have bought, sold, sent, or received more than $20,000 through their accounts in a single year. The digital asset broker estimates that 14,355 users meet the government's requirements. The Verge reports: For each account, the company has been asked to provide the IRS with the user's name, birth date, address, and taxpayer ID, along with records of all account activity and any associated account statements. The result is both a definitive link to the user's identity and a comprehensive record of everything they've done with their Coinbase account, including other accounts to which they've sent money. The order is significantly narrower than the IRS's initial request, which asked for records on every single Coinbase user over the same period. That request would also have required all communications between Coinbase and the user, a measure the judge ultimately found unnecessarily comprehensive. The government made no claim of suspicion against individual users, but instead argued that the order was justified based on the discrepancy between Coinbase users and U.S. citizens reporting Bitcoin gains to the IRS.
Cash may not be as anonymous as you think.
Larger cash transactions will most certainly attract greater scrutiny.
You're likely to be on multiple cameras during or en-route to / from the transaction.
Your cell phone, when GPS is running, ( your knowledge or not ) is accurate to six digits past the decimal point.
License plate scanners will know where you were at any given time if you drive.
This list can go on and on and on.
Point is, we can minimize it to the best of our ability, but what we do these days is far from anonymous.
Bitcoin and all the crypto-currencies will skyrocket in value, right up to the point where the governments get serious about it and bring in the regulation hammers. It is at that point those investing in such things will learn what the term " risk " truly means.
I signed up for a Kraken and Gdax (aka Coinbase) account lately and between the two I needed a live pic of my license, pic of me holding my driver's license, my social, my full name, a scan of my license, a pic of me holding my signature, etc. They comply with the banking secrecy act or they get shut down (like Tradehill). So because I had to give them all this, I report all my income in Quickbooks at my company where I run 4 giant mining rigs. So don't just assume all of us are tax evaders as most of us are not.
I thought transactions that are "Paid-In-Kind" are exempt. Money for money should not be taxed.
The IRS would argue that bitcoin is not money. It's no different than if you bought and sold gold coins for a monetary gain. You owe tax on the gains.
Actually it *is* unreasonable because the net would identify the business operators who use Coinbase to cash out to fiat every night. And it would catch investors who simply moved their bitcoins off of coinbase into mobile wallets or cold storage and still have them. No capital gains to report, but identified anyway. Though they did nothing wrong, those folks who are cleared remain on some list and somehow get a higher chance than others at being audited or detained crossing a border or something. They will be the first people threatened and abused if the law changes and makes bitcoin/etc illegal. And there will be false-positives on the list who get similar treatment.
Just because transactions up to $20k are routinely monitored doesnt make that practice right, necessarily. If we fail to speak up for Coinbase and its users now, then we will be sorry when regulatory creep later lowers the bar and everybody will bear the burden of recording and reporting every single transaction. The same burden won't apply to fiat of course.
The IRS is clearly (to my mind) overstepping its bounds and if unchecked it will lead to worse things.