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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.
They told me cryptocurrencies were anonymous :^)
Make ONE association of a transaction to an individual, and then you have ALL transactions that individual has ever made, all recorded. It won't just be a single year that can be checked, it will be all years, from any source. The fatal flaw of blockchain is that all transactions are 100% traceable, and each transaction uses an identifer that is unque - and consistent - to a single user. Crack that association once - and it's cracked for all time, past, present and future. Cash is still anonymous ...
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
and the IRS jail you for cheating on your taxes!
It's the IRS, lol. Those miners about to be taxed, hope they didn't spend it all - they might need some of it + penalties.
We need a Patriot act for finance. What do people have to hide?
Untaxed money?
Most people are just fine with using a bank account to store money, and credit cards to purchase items where all sorts of people and agencies can review transactions.
Why would any of those people care if transactions could be traced forever? Lots of people already sign up with bitcoin exchanges giving as much information as they would a bank.
The only people that is a "fatal flaw" for are people who do not want anyone to review transactions, and long term they will not make up more than a small percentage of bitcoin users.
It does mean as this gets adopted bitcoin is less anonymous than cash, for sure. But again most people do not care as long as it as convenient as cash.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
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.
Not that I count much on the wisdom of markets but I am curious about the relative timing of today's jump in BTC and the news of that ruling. A Bloomberg article dated today, on bitcoins risks did not mention this.
SLASHDOT: news for people who can't concentrate on work or have no life at all and got tired of yelling back at the TV.
Do you pay with virtual dollars?
All coinbase users must be tax evaders simply because ... uh ... uh ... Okay well not ALL users just the ones who bought more than $20k because that sounds like a really big number to [edited] people who are afraid of spooky numbers and computers and stuff
Actually, given the figures, that's not that unreasonable. The estimated figures say under 900 users reported bitcoin earnings from 2013-2015, during which time 14,000 users at Coinbase sold, sent or received more than $20k worth. Now, clearly not all of those users are committing tax fraud. But that's not the point of a tax probe. It's likely that enough are to make a review worth it. Transactions of that magnitude are routinely monitored in the world.
-Daniel
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.
and the IRS jail you for cheating on your taxes!
That's no joke. The US Government considers cheating on taxes to be a very serious offense. In fact, the tough penalties for tax crimes are so well known that prosecutors sometimes elect to go after the tax charges, rather than other chargeable offenses, because the penalties are so much higher. There was a case in Las Vegas some years back where instead of busting a pimp for running prostitutes, which had a 2 year prison sentence, they prosecuted the guy for tax evasion because he didn't declare and pay taxes on his pimping income and he got 30 years for that instead. This wasn't an accident. The authorities didn't like the guy and wanted him off the streets, so they used the tax charges to put him away for a long time and didn't even bother with the pimping charges.
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.
Was the IRS only interested in transactions where dollars were exchanged? And if not, then what reference did they give to assign the dollar value of the other currency at the time the transaction occurred?
So basically: 1) Hoard 2) Move to a tax haven 3) Then cash out
Transactions paid in kind are exempt, but they stop being paid in kind if the transaction from one currency to another and then back results in a net gain or loss.
As long as money is being exchanged for money that has equal value it should not be taxed. If you pay $5 USD and receive the equivalent value of $5 USD in BTC then there's nothing to tax.
However, if you spend $5 USD and received $10 USD worth of BTC then you should be reporting the difference of $5 USD as income. Further, if you purchase $5 USD worth of BTC with $5 USD and the value of BTC relative to USD rises so your $5USD worth of BTC is now $500 USD worth of BTC then you would be required to file the difference ($495 USD) as income once you no longer possess the BTC unless the method by which you lost possession of the BTC is not due to theft, loss, or purchasing an item worth $500 USD or less. If you bought something worth $1000 USD with your BTC now worth $500 USD you would have to report $500 as income.
The IRS has a very keen interest on getting the transactional records of individuals who are doing things in BTC because by their definitions there's plenty of opportunity there for tax evasion.
"Lack of speed can be overcome. In the worst case by patience." --Znork
Capone is similar but sufficiently different. With the Las Vegas pimp they had the evidence and witnesses to pursue the pimping charges or the tax evasion charges but elected for tax evasion because of the higher sentencing to keep him off the streets for longer. With Capone they lacked the evidence and witnesses to nail him for the organized crime charges but were able to eventually get the evidence to make the tax evasion charges stick to him to get him off the streets. The former is a little more egregious because the prosecution made a conscious decision to punish someone for being a pimp by using the tax laws rather than charging the guy with the crime that directly harmed other individuals. It wasn't even a situation where they failed to convince the jury of the pimp charges and then elected for the tax evasion charges which would at least have a more honorable pallet.
"Lack of speed can be overcome. In the worst case by patience." --Znork
You have however gained financial wealth over time. That's either a capital gain, or an income. Both are taxable.
How you gained it is only of interest when working out which aspect of the tax legislation applies.
correct, so the follow-up is that since they also are going after transfers, at what point do they consider you having cheated.
Using stocks as an example:
1) I buy one share of MegaCorp for $100 in an eTrade account.
2) The stock goes up to $1000: I have a paper gain of $900, but no real gain, so no taxes are due.
3) I transfer that stock to Merryl Lynch, still no gains
4) I sell the stock and after commissions etc. I pocket an $850 gain. I owe taxes on the $850.
It sounds like the IRS is considering taxing at step 3 which is an issue, unless they can prove that step 4 had to have happened implicitly.
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I have a hard time feeling bad for a pimp.
whois gawk date unzip strip find touch finger mount join nice man top fsck grep eject more yes exit umount sleep dump
There are already regulations requiring financial institutions to report transactions of $10k (or multiple smaller transactions adding up to more) or more. Why should this be any different? So, if your argument is that they should be able to collect that information at all, then you probably don't much care about tax evasion, and money laundering. Otherwise, your only logical argument is with respect to the figure. Too small of a number just isn't worth the IRS's time. $10 - $20k seems perfectly reasonable to me.
Just another day in Paradise
If you write a check for $10k or over, the banks have to hold it for 10 days, and report it. The judge should have chosen $10k... and this should be true for ALL cryptocurrencies.
Cryptocurrencies: avoid paying taxes (and stick the rest of us with your damn taxes), and helping crime (ransomware? money laundering anyone?)
You're an idiot.
Alleged democracies, like the us, belong to "we, the people", and use our tax dollars for provide things.
And if *you* don't want to pay taxes, then get the fuck off the highways *my* taxes paid for, don't walk on the street *my* taxes paid for, don't use city water or sewer. In fact, get the hell out of the country that *my* taxes paid for.
And take your guns with you, to protect you against any invading army., navy, or air force.
ah, didn't think about that angle... and ooooh that's a tangled mess!
whois gawk date unzip strip find touch finger mount join nice man top fsck grep eject more yes exit umount sleep dump
There are legally-valid regulations in force on the use of *fiat* as granted by constitutional amendment. Crypto is not issued by any central bank and not controllable by any government. In short: They didn't create it, they don't own it and they don't control it.
The Ninth Amendment says the government does not automatically get control over new things. Here we have a new thing: not currency, not stocks, not real property. I haven't heard of any recent constitutional amendments granting the govt new power.
And TBH I personally dont care about tax evasion and money laundering because I dont do those things or know how they work. Besides, crypto erases those problems precisely *because* govt can't control it.
And $20k is nothing in the great scheme of things.
This article just made me go check my coinbase account. Of course i did $20,080 worth of transactions and the worst part is the coins I transferred in Coinbase assigned a cost basis of $2-5 for some reason...God I wish I had purchased .5 bitcoins for $2.38.
Now it looks like I have almost $15,000 in capital gains. Wonderful.
What we still have is a citizen who is responsible for paying taxes and a government that is constitutionally authorized to collect taxes. Since cryptocurrency has been determined to be an asset by the IRS its use seems to fall under the regulations regarding "bartering income". Sorry, cryptocurrency is not really anything new in this sense.
What we still have is a citizen who is responsible for paying taxes [on taxable items] and a government that is constitutionally authorized to collect taxes [within the scope of the law].
Nope. Bitcoin/etc is definitely new, a way of storing value that can't be seized. It's better than burying gold in the back yard.
And the fishing expedition is still illegal whether or not capital gains taxes are lawful.
What we still have is a citizen who is responsible for paying taxes [on taxable items]
and income, whether fiat or barter or bitcoin
Bitcoin/etc is definitely new, a way of storing value that can't be seized.
Actually it already has been seized. Seize a wallet and the coins are seized. The FBI seized 40% (?) of the bitcoin wallets at the Russian exchange BTC-e.
> Actually it already has been seized. Seize a wallet and the coins are seized. The FBI seized 40% (?) of the bitcoin wallets at the Russian exchange BTC-e.
The keys in a personal wallet, on a cellphone for example. are encrypted with a PIN/passhphrase and can be backed up. So even if someone loses the phone, s/he can restore the keys on a different device.
> Actually it already has been seized. Seize a wallet and the coins are seized. The FBI seized 40% (?) of the bitcoin wallets at the Russian exchange BTC-e.
The keys in a personal wallet, on a cellphone for example. are encrypted with a PIN/passhphrase and can be backed up. So even if someone loses the phone, s/he can restore the keys on a different device.
Hence the 60% not seized, but the point remains coins were seized via the wallet. Coins are also lost accidentally due to the loss of a wallet. We all know how good the average user is with their backups, and their PINs and passwords for that matter. Also when the government wants your coins they will likely get a warrant for all your computers, phones, backups, etc.
can't argue with the barrel of a gun, for sure, nor should one try