5 ms·

Also, is there any idea about how much money the IRS could possibly recover through bitcoin? Is bitcoin even a significant source of loss for the IRS as compare

by drvdevd 10y ago

Also, is there any idea about how much money the IRS could possibly recover through bitcoin? Is bitcoin even a significant source of loss for the IRS as compared to say, cash?

the_mitsuhiko 10y ago
Large cash transactions require reporting so I assume that it's not a huge deal to confiscate there.
- drvdevd 10y ago
  I was thinking more along the line of the many smaller transactions, e.g.: unreported cash tips, that the IRS loses money on each year.
  - the_mitsuhiko 10y ago
    Surely cash tips up to a level are tax excempt.
    - drvdevd 10y ago
      Agreed. But from what I recall having worked in restaurants, etc, the IRS does take steps to encourage reporting of any cash wages by pressuring employers to notify their employees of that obligation. So it must be considered a signifcant source of taxable income to them. But of course thats just one example of possible cash income...
    - aianus 10y ago
      No, they're not. Legally, you have to declare all tips that you earn.
      - the_mitsuhiko 10y ago
        TIL. They are tax excempt where I live. However it looks like in that case it's even less of an issue because seems like the employer is required to report this for calculating medicare contributions anyways if I understand this correctly.
        aianus 10y ago
        It would be silly IMO for the taxman to officially discriminate against (poorer!) dishwashers vs. waiters in the same restaurant.
        URSpider94 10y ago
        If you live in the USA, then they are not tax exempt. They may be exempt from state income tax, but not Federal. All income, whether reported or not, whether cash or not, even barter or in-kind income, is taxable. That said, you have to make a personal decision on what level is worth tracking, and the IRS has to decide how aggressively it wants to audit.
  - jsjohnst 10y ago
    The IRS regularly busted people for this when I waited tables back in the 90s, so I can't imagine that it got harder for them to do so now with more advanced technology.
deleted 10y ago
[deleted]
chris11 10y ago
I'd say one advantage of bitcoin is the lack of reporting requirements if you wanted to move money without letting the IRS know. So I could see how bitcoin could be a loss for the IRS.
- drvdevd 10y ago
  Right, but the IRS has already classified bitcoin and provided guidance as to reporting requirements [1]. This situation isn't much different to cash wages. You can in theory not report any of it, but then you're breaking essentially the same law. My question is: don't losses from unreported cash wages vastly outnumber losses from unreported virtual currencies and isn't that likely to remain the case for the forseeable future? With this sort of action, is the IRS signaling a belief that virtual currencies will replace cash for average citizens in the near future? [1] https://www.irs.gov/uac/newsroom/irs-virtual-currency-guidance https://www.irs.gov/uac/newsroom/irs-virtual-currency-guidan...
  - jsjohnst 10y ago
    I'm not sure there is the massive "losses from unreported cash wages" you seem to imply there is. There's two main forms of "cash wages" in the US. One being wait staff, the other being "under the counter pay" to workers, generally labor intensive. Wait staff who regularly under report their tips are easily identified by the IRS. In the second case, these generally aren't well paid jobs (thus wouldn't generate much, if any, tax revenue).
    - vajrabum 10y ago
      There's underreporting and tax evasion in almost any business which can be conducted on a cash basis. I know of a heating air-conditioning contractor (now deceased I believe) who regularly got customers to write checks directly out to him and take those to a check cashing business. He was very clear he was doing this to evade taxes.
    - EdHominem 10y ago
      They aren't implying there are massive losses. They implied that the losses from cash, whatever they are, would massively outnumber the losses from cryptocurrencies. (And thus that cryptocurrency-focused reforms are missing the point.)

by drvdevd 10y ago

Also, is there any idea about how much money the IRS could possibly recover through bitcoin? Is bitcoin even a significant source of loss for the IRS as compared to say, cash?

the_mitsuhiko 10y ago

Large cash transactions require reporting so I assume that it's not a huge deal to confiscate there.

drvdevd 10y ago
I was thinking more along the line of the many smaller transactions, e.g.: unreported cash tips, that the IRS loses money on each year.
- the_mitsuhiko 10y ago
  Surely cash tips up to a level are tax excempt.
  - drvdevd 10y ago
    Agreed. But from what I recall having worked in restaurants, etc, the IRS does take steps to encourage reporting of any cash wages by pressuring employers to notify their employees of that obligation. So it must be considered a signifcant source of taxable income to them. But of course thats just one example of possible cash income...
  - aianus 10y ago
    No, they're not. Legally, you have to declare all tips that you earn.
    - the_mitsuhiko 10y ago
      TIL. They are tax excempt where I live. However it looks like in that case it's even less of an issue because seems like the employer is required to report this for calculating medicare contributions anyways if I understand this correctly.
      - aianus 10y ago
        It would be silly IMO for the taxman to officially discriminate against (poorer!) dishwashers vs. waiters in the same restaurant.
      - URSpider94 10y ago
        If you live in the USA, then they are not tax exempt. They may be exempt from state income tax, but not Federal. All income, whether reported or not, whether cash or not, even barter or in-kind income, is taxable. That said, you have to make a personal decision on what level is worth tracking, and the IRS has to decide how aggressively it wants to audit.
- jsjohnst 10y ago
  The IRS regularly busted people for this when I waited tables back in the 90s, so I can't imagine that it got harder for them to do so now with more advanced technology.

deleted 10y ago

[deleted]

chris11 10y ago

I'd say one advantage of bitcoin is the lack of reporting requirements if you wanted to move money without letting the IRS know. So I could see how bitcoin could be a loss for the IRS.

drvdevd 10y ago
Right, but the IRS has already classified bitcoin and provided guidance as to reporting requirements [1]. This situation isn't much different to cash wages. You can in theory not report any of it, but then you're breaking essentially the same law. My question is: don't losses from unreported cash wages vastly outnumber losses from unreported virtual currencies and isn't that likely to remain the case for the forseeable future? With this sort of action, is the IRS signaling a belief that virtual currencies will replace cash for average citizens in the near future? [1] https://www.irs.gov/uac/newsroom/irs-virtual-currency-guidance https://www.irs.gov/uac/newsroom/irs-virtual-currency-guidan...
- jsjohnst 10y ago
  I'm not sure there is the massive "losses from unreported cash wages" you seem to imply there is. There's two main forms of "cash wages" in the US. One being wait staff, the other being "under the counter pay" to workers, generally labor intensive. Wait staff who regularly under report their tips are easily identified by the IRS. In the second case, these generally aren't well paid jobs (thus wouldn't generate much, if any, tax revenue).
  - vajrabum 10y ago
    There's underreporting and tax evasion in almost any business which can be conducted on a cash basis. I know of a heating air-conditioning contractor (now deceased I believe) who regularly got customers to write checks directly out to him and take those to a check cashing business. He was very clear he was doing this to evade taxes.
  - EdHominem 10y ago
    They aren't implying there are massive losses. They implied that the losses from cash, whatever they are, would massively outnumber the losses from cryptocurrencies. (And thus that cryptocurrency-focused reforms are missing the point.)