Court Rules IRS Can Seek Information on Bitcoin Customers • Hacker News Board

Re: Court Rules IRS Can Seek Information on Bitcoin Customers

#41

Post by koliber » Thu, Dec 01, 2016, 11:06 AM UTC

throwawayqwer wrote: post #22

Say someone bought Bitcoins from Coinbase and transferred them to their own wallet outside of Coinbase. They haven't sold them, so there's no taxes to pay and nothing to report to the IRS, right? How is the IRS going to know the difference between that situation, where they have done nothing wrong, and someone who sold them outside of Coinbase and didn't pay taxes on it? Are they just going to audit everyone over som…

It's difficult to guess how the IRS would treat it.

How are they going to know the difference? For one, you can tell them. I don't know what the proper form for this would be, but I am sure an accountant can help out.

Scaremongering aside, I've found dealing with the IRS rather sane.

I would think that the IRS would treat a transfer of coins from a wallet you own to a wallet you do not own as a taxable event. They would take difference in value of the coins between when you acquired them and transferred them away, and if it is positive, would call it a profit.

On the other hand, if you declared that you owned both the source and destination wallet, I would imagine that the IRS would not treat this as a taxable event, in the same was as transferring USD between your checking and savings account is not a taxable event.

The IRS relies in a huge part on you self-reporting things. They do get a lot of info from the source (bank transaction records, 1099's, W2's). In many cases, the onus is on the taxpayer to tell the IRS the information that they need.

By default, the IRS takes self-reported information at face value and believes you. However, sometimes, they may decide to investigate. This is called an audit, and then the onus is on you to prove that what you provided is true.

Re: Court Rules IRS Can Seek Information on Bitcoin Customers

#42

Post by mindcrime » Thu, Dec 01, 2016, 11:07 AM UTC

oelmekki wrote: post #27

delegate wrote: post #21

Earlier quoted context omitted.

Of course. Taxes are the basis of state, which uses taxes to develop and maintain its capability to threaten you with violence if you dont't pay taxes. It's a recursion which has plagued the world for centuries. The whole system can in theory be replaced with non-profit investments funds, which crowdfund social projects. You dont even have to elect 'leaders', because citizens will be involved full time in running thi…

I take it you live in a country where people are ok to see other people living off the street because they presumably "failed"? That's the only reason I can think of which would make it possible for charities to fit government action scale. Also, I wonder how local non profit organize against a nation wide invasion (not saying it's impossible, but you have to prepare for it, which costs money). I live in a country wh…

I'm ok with paying taxes for those.

Your being OK with taxes is completely irrelevant to anything outside of yourself. As long as taxation is practiced the way it is here in the US (eg, enforced at the end of a gun barrel) it's theft, and it's immoral, no matter how noble the purported objective(s).

Eliminating taxation does not, however, preclude the idea of voluntary, collective funding for important causes, including the idea of a "social safety net".

If taxes is a problem for you, I'm pretty sure there are a lot of countries where you can move and that you will find adequate

That is also irrelevant. There's no reason the people being robbed should be the ones to move. A better idea would be to construct a social system based purely on voluntary exchanges and interactions altogether.

Re: Court Rules IRS Can Seek Information on Bitcoin Customers

#43

Post by delegate » Thu, Dec 01, 2016, 11:07 AM UTC

mindcrime wrote: post #24

delegate wrote: post #21

Earlier quoted context omitted.

Of course. Taxes are the basis of state, which uses taxes to develop and maintain its capability to threaten you with violence if you dont't pay taxes. It's a recursion which has plagued the world for centuries. The whole system can in theory be replaced with non-profit investments funds, which crowdfund social projects. You dont even have to elect 'leaders', because citizens will be involved full time in running thi…

There are a lot of people who like the system the way it is and they won't give it up because us idealists want a better world for their children It really is an old argument. The arrogance of thinking that a small handful of elites should "run things" for the stupid commoners dates back at least as far as Plato's era and the idea of the "philosopher king".

> The arrogance of thinking that a small handful of elites should "run things" for the stupid commoners dates back

Not sure if you're calling me arrogant or not, by all means I'm all for a new society in which people govern themselves as much as is technologically possible.

I believe that the system of 'elites' has been taken to an extreme globally and is one of the main reasons for the dire state of the whole system, including climate change, pollution, financial bubbles, etc.

What I'm saying though is that the 'old' system is built to perpetuate itself - they have power - military, police, justice...

And they won't give it up for some shiny new ideas, even if it means self-destruction.

Re: Court Rules IRS Can Seek Information on Bitcoin Customers

#44

Post by mindcrime » Thu, Dec 01, 2016, 11:09 AM UTC

delegate wrote: post #43

mindcrime wrote: post #24

Earlier quoted context omitted.

There are a lot of people who like the system the way it is and they won't give it up because us idealists want a better world for their children It really is an old argument. The arrogance of thinking that a small handful of elites should "run things" for the stupid commoners dates back at least as far as Plato's era and the idea of the "philosopher king".

> The arrogance of thinking that a small handful of elites should "run things" for the stupid commoners dates back Not sure if you're calling me arrogant or not, by all means I'm all for a new society in which people govern themselves as much as is technologically possible. I believe that the system of 'elites' has been taken to an extreme globally and is one of the main reasons for the dire state of the whole system…

It sounds like we largely agree. When I speak of arrogance, I'm referring to the advocates for the existing system and especially the "elites" who rule things. Just pointing out that this whole debate has been going on for a very, very long time now.

Re: Court Rules IRS Can Seek Information on Bitcoin Customers

#45

Post by mindcrime » Thu, Dec 01, 2016, 11:10 AM UTC

the_mitsuhiko wrote: post #26

mindcrime wrote: post #19

The solution to this is obvious: eliminate the IRS. And the income tax. And most of the federal government. Spin off the actually useful bits as private non-profit foundations (or possibly even for-profit companies depending on the scenario) and let them earn their own keep based on the value they provide. A sufficiently small government can be funded without an income tax, as history shows us.

And what pays for infrastructure?

The people that use it?

Re: Court Rules IRS Can Seek Information on Bitcoin Customers

#46

Post by tn13 » Thu, Dec 01, 2016, 11:12 AM UTC

nullc wrote: post #28

So-- IRS seeks _all_ transaction records for all coinbase customers. Not just buying and selling Bitcoin but also people using their wallet services, which would mostly be users moving around their own funds (not a taxable event). They're doing this on the basis that there might be evidence of tax evasion in there somewhere. Which is plausible, I suppose. Thing is: All this same data was also emailed to the customers…

I am not surprised that IRS needs to work with coinbase to find tax evaders but a `John Doe summons` ?

Again, I fail to see any legal rational in the court's verdict. This is a bad precedent and I seriously hope Coinbase gets support from other tech giants to take it to Supreme Court. This clearly seems like violation of 4th amendment.

I have no doubt that Gmail will be next.

Re: Court Rules IRS Can Seek Information on Bitcoin Customers

#47

Post by pjc50 » Thu, Dec 01, 2016, 11:15 AM UTC

delegate wrote: post #37

pjc50 wrote: post #29

Earlier quoted context omitted.

> You dont even have to elect 'leaders', because citizens will be involved full time in running things Those are the leaders, they're just 100% more self-appointed and unaccountable. Your whole scheme is just Bolshevism with the terminology changed.

> Your whole scheme is just Bolshevism with the terminology changed. Bolshevism excludes private property and implements the dictatorship of the proletariat, which is a different form of government. What I propose is a system in which normal people are involved in day-to-day politics - with their votes and their money. The representative system that most 'democracies' implement today do so because until recently ther…

I suspect the result would be more like allowing newspaper comment sections to run the world. People don't have the knowledge, responsibility or involvement for this. Engagement will be low, and therefore the system will be taken over by cranks. Local councils already suffer minor versions of this problem.

I'm reminded of the UK's "Police and Crime commissioners", an attempt at getting democratic involvement in policing who get elected on turnouts of 15%.

Re: Court Rules IRS Can Seek Information on Bitcoin Customers

#48

Post by Fluxenein » Thu, Dec 01, 2016, 11:16 AM UTC

paulsutter wrote: post #18

You can't omit Bitcoin transactions from your tax return just because they seem anonymous. Concealment is the very definition of tax evasion, "Evasion... involves deceit, subterfuge, camouflage, concealment, some attempt to color or obscure events or to make things seem other than they are" Quoting in full since its among the most misunderstood yet important distinctions in tax: http://www.irs.gov/irm/part9/irm_09-00…

So, if an individual buys BitCoin with some capital to not pay taxes for said amount of capital ,is he evading or avoiding?

Re: Court Rules IRS Can Seek Information on Bitcoin Customers

#49

Post by the_mitsuhiko » Thu, Dec 01, 2016, 11:20 AM UTC

mindcrime wrote: post #45

the_mitsuhiko wrote: post #26

Earlier quoted context omitted.

And what pays for infrastructure?

The people that use it?

That does not work because most infrastructure needs to be subsidized because it's too expensive for the users of it. A good example is a road up a mountain where only 15 people live. The cost of that road would always be too high for those people.

Re: Court Rules IRS Can Seek Information on Bitcoin Customers

#50

Post by oelmekki » Thu, Dec 01, 2016, 11:21 AM UTC

delegate wrote: post #40

oelmekki wrote: post #27

Earlier quoted context omitted.

I take it you live in a country where people are ok to see other people living off the street because they presumably "failed"? That's the only reason I can think of which would make it possible for charities to fit government action scale. Also, I wonder how local non profit organize against a nation wide invasion (not saying it's impossible, but you have to prepare for it, which costs money). I live in a country wh…

>I take it you live in a country where people are ok to see other people living off the street because they presumably "failed"? I live in Spain, there's no such thing here. What I propose is for people to have the ability to specify what their taxes are spent on. I dislike it when government wastes tax money on useless or corrupt projects, military, police, surveillance and other such things, which I personally woul…

I like the idea of being able to choose where taxes are spent, but maybe not in totality. If people choose for the whole attribution, they'll certainly spend everything in healthcare when them or one of their family member will be sick, then on infrastructure when they'll want to make a road trip, etc. But totally agree that people should have a bigger role to play in governments decisions.

That being said, thinking having a central government is the problem is extreme. Your examples and suggestions simply demonstrate we need more democracy, not less government.

EDIT: yeah, thinking about it twice, it definitely needs to be only a part of the taxes you can choose where to allocate, and thus some kind of administration to decide about the rest. Think about this scenario:

You live in a country where unemployment is high and sickness are low. People will naturally spend most of the budget in reforms allowing for more jobs, because they, or people they know, are unemployed. But there are sick people, with no budget. If the amount sick people pay in tax is enough to heal them, that's ok. Now, imagine it costs more, like, you need expansive medicine to cure a virus. People will still invest in job reforms, until they hear about a big epidemic that threatens them. Only then will they start to allocate taxes to healthcare, which will cost way more because the epidemic will be already there.

With no fixed budgeting failsafe, such a system will naturally create a lot of epidemics, and other problems caused because small problems are not fixed early enough. Also, those who have rare problems are screwed and will fall first, so you'll probably having a less creative and risk taking society.