4 ms·

If you're trying to use bitcoin to avoid tax obligations, the IRS is more than capable of coming after you. Launder your coins? You bet they can track that. B

by Hasz 9y ago

If you're trying to use bitcoin to avoid tax obligations, the IRS is more than capable of coming after you. Launder your coins? You bet they can track that. Buy off localbitocins? Still trackable, given enough interest. Never done anything with the coin, just a wallet.dat file? The money's no good if you can't use it, and they'll want what's owned the minute it moves. The IRS will get what it is owed, whether you like it or not. The only real way to avoid them is to be worth so little it's not worth their time.

JumpCrisscross 9y ago
Moreover, if you take steps like laundering coins or meeting in person specifically to avoid paying taxes, you've handed the IRS evidence to prosecute you for willful evasion. You're trading money today for jail time tomorrow. Disclaimer: I am not a lawyer. This is not legal advice. Pay your taxes.
- bonestamp2 9y ago
  I don't know how they'd prove you met someone specifically to avoid taxes. I mean, prior to coinbase there weren't any good/easy ways to get bitcoin... it all seemed a little bit sketchy on the surface -- you were either buying it from someone in person or using the red phone in the back of CVS. Coinbase was a godsend when it came along. No more explaining to my wife why I was going to the sketchy part of town because that CVS has a red phone... finally a legit company that I can buy from! But, even with coinbase and gemini and any other legit exchanges, you may still want to buy bitcoin from someone in person if you've hit your weekly maximum on the exchange. I know some local computer repair people who buy lots of bitcoin to pay off their client's cryptolocker incidents. They easily hit their weekly limits for business purposes.
  - JumpCrisscross 9y ago
    > I don't know how they'd prove you met someone specifically to avoid taxes I'm not saying using these services per se is necessarily enough to warrant arrest. But if you're (a) not reporting taxable holdings or income, (b) using these services after alternatives are available and (c) running your mouth on forums about cashing in your Bitcoins while on vacation in Europe, you're in the easy pile. Disclaimer: I am not a lawyer. This is not legal nor tax advice. Pay your taxes.
    - mancerayder 9y ago
      Disclaimer: I am not a lawyer. This is not legal nor tax advice. Pay your taxes. Your advice has been useful to read so far, but are you seriously concerned a username on here will hold you to account if the advice goes awry? It has a nervous/pedantic air (no offense intended, just the impression as a reader when seeing repeated footers).
      - JumpCrisscross 9y ago
        > It has a nervous/pedantic air (no offense intended No offense taken :). Most prominently, I do it as a courtesy. A lawyer's comments on these matters should carry more weight than my own. Second to that, one might characterize me as nervous and pedantic about such things.
    - bonestamp2 9y ago
      Fair enough.
- gamblor956 9y ago
  It's not against the law for non-lawyers to give advice about legal matters, unless they're doing so in a specific legal context (i.e., a courtroom) and they're either claiming to be, or holding themselves out to be, a competent advisor on legal matters. For example: John Smith can tell his friends whatever he wants about the law, including specific legal matters like DUIs, as long as John Smith doesn't claim to be a lawyer. So please stop including that disclaimer in your comments. Edit: Since the HN armchair lawyer brigade is apparently misinterpreting my comments: continue to say that you are not a lawyer, but stop saying that you are not providing legal advice because you are, so claiming that you are not offering legal advice has no legal effect. I am a lawyer. I am not your lawyer.
  - daveguy 9y ago
    When giving advice of a legal nature it is important for the recipient of that advice to know that it is not coming from a lawyer, but a lay interpretation. Please keep including that disclaimer in your arguments. Especially when discussing what you would do in a legal or tax setting. Also, if you are not a doctor, but are giving your personal medical recommendations, please specify that too. It is as much to inform the recipient of the advice quality as it is to cover the giver of the advice.
    - deleted 9y ago
      [deleted]
- loeg 9y ago
  It's a white collar crime. Probably no jail time, just fines and community service.
  - tatersolid 9y ago
    Many people in recent history have done serious multi-year sentences for evading taxes on amounts well under $1M. The same is likely true for violations of OFAC, BSA, and AML laws. Even minimum security prisons aren’t a lot of fun, and good luck re-starting anything resembling a career or life when you’re released.
- dsfyu404ed 9y ago
  >Disclaimer: I am not a lawyer. This is not legal advice. Pay your taxes. http://i.imgur.com/4CofAk7.jpg http://i.imgur.com/4CofAk7.jpg You aren't even willing to discuss the subject in a pro-"abide by the law" way without a CYA. Chiling effects indeed...
saas_co_de 9y ago
far from true. the IRS passes on many enforcement actions because the cost-benefit calculus doesn't pencil out against wealthy and sophisticated parties who can afford to spend years in litigation. The bulk of IRS enforcement is against low income people who cheat on child tax credits and earned income credit. The nature of all predators is to attack the weak.
- showerst 9y ago
  I don't see enough data to parse the claim about the IRS ignoring the wealthy, but the second seems to be false, here are some sources: https://www.irs.gov/statistics/soi-tax-stats-examination-coverage-individual-income-tax-returns-examined-irs-data-book-table-9b https://www.irs.gov/statistics/soi-tax-stats-examination-cov... https://www.irs.gov/statistics/soi-tax-stats-civil-penalties-assessed-and-abated-by-type-of-tax-and-type-of-penalty-irs-data-book-table-17 https://www.irs.gov/statistics/soi-tax-stats-civil-penalties... The vast majority of audits are of those making > 1,000,000 in income, and the average enforcement is more than $10,000. Even with a few mega-enforcements to skew the numbers, the "bulk" of enforcement can't be against low income people, they don't owe enough to make the math work out.
  - saas_co_de 9y ago
    So, let's do the math: on link #2 "Civil Penalties Assessed" for 2015 for Individuals there were 31,808,876. Since there are only 3.7 million households making over 250,000 per year (https://en.wikipedia.org/wiki/Household_income_in_the_United_States https://en.wikipedia.org/wiki/Household_income_in_the_United...) even if 100% of wealthy individuals had enforcement actions, they would only account for ~10% of enforcement actions. So that is one data point. If you go back to link 1 "Examination Coverage" you will see that the highest percentage of examinations amongst low/middle income people is for people with 0-25K income, which would coincide with precisely with the Earned Income Credit. These examination percentages are also highly misleading because for simple low income tax fraud, like I am talking about, it is mostly detected by computers and they only "examine" it after they already know there is an irregularity.
orblivion 9y ago
This sounds like the opening sequence for COPS. "Crime doesn't pay". I suppose if they hire the NSA they can get you on anything.
Kiro 9y ago
I don't understand what taxes you could possibly avoid by putting money in Bitcoin. Enlighten me please. Are we talking about companies here?
- bklyn11201 9y ago
  Buying a stock or Bitcoin is not taxable. Selling an appreciated stock or asset is taxable. If you bought 100 Bitcoin for $900 each in January and sell it for $9000 each in December, you owe the federal government 39.6% x ($9000 - $900) * 100 bitcoins
  - Kiro 9y ago
    Is this what we're talking about though? I got the impression it was about using Bitcoin to avoid other taxes.
    - bklyn11201 9y ago
      Sure, it's exactly what we're talking about. The IRS says less than 1000 citizens claimed Bitcoin appreciated capital gains, but Coinbase has 14,355 US citizens who transacted more than $20k. Surely there are a few thousand people in there not reporting their appreciated gains from Bitcoin sales.
Nokinside 9y ago
>Launder your coins? You bet they can track that. They don't have to track it. Money laundering laws usually have reverse burden of proof. They seize your money. Then you have to explain it's origin or you lose it for good.
stale2002 9y ago
People have been saying this ever since Bitcoin was invented. But has it been proven true? It seems like for all this big talk about how the government is all powerful, a whole lot of people have been able to get away with a lot of stuff. This also isn't just about the US. This is about other countries as well. Venezuelans have been using Bitcoin very effectively to get around government oppression and capital controls, for example.

by Hasz 9y ago

JumpCrisscross 9y ago

Moreover, if you take steps like laundering coins or meeting in person specifically to avoid paying taxes, you've handed the IRS evidence to prosecute you for willful evasion. You're trading money today for jail time tomorrow. Disclaimer: I am not a lawyer. This is not legal advice. Pay your taxes.

bonestamp2 9y ago
I don't know how they'd prove you met someone specifically to avoid taxes. I mean, prior to coinbase there weren't any good/easy ways to get bitcoin... it all seemed a little bit sketchy on the surface -- you were either buying it from someone in person or using the red phone in the back of CVS. Coinbase was a godsend when it came along. No more explaining to my wife why I was going to the sketchy part of town because that CVS has a red phone... finally a legit company that I can buy from! But, even with coinbase and gemini and any other legit exchanges, you may still want to buy bitcoin from someone in person if you've hit your weekly maximum on the exchange. I know some local computer repair people who buy lots of bitcoin to pay off their client's cryptolocker incidents. They easily hit their weekly limits for business purposes.
- JumpCrisscross 9y ago
  > I don't know how they'd prove you met someone specifically to avoid taxes I'm not saying using these services per se is necessarily enough to warrant arrest. But if you're (a) not reporting taxable holdings or income, (b) using these services after alternatives are available and (c) running your mouth on forums about cashing in your Bitcoins while on vacation in Europe, you're in the easy pile. Disclaimer: I am not a lawyer. This is not legal nor tax advice. Pay your taxes.
  - mancerayder 9y ago
    Disclaimer: I am not a lawyer. This is not legal nor tax advice. Pay your taxes. Your advice has been useful to read so far, but are you seriously concerned a username on here will hold you to account if the advice goes awry? It has a nervous/pedantic air (no offense intended, just the impression as a reader when seeing repeated footers).
    - JumpCrisscross 9y ago
      > It has a nervous/pedantic air (no offense intended No offense taken :). Most prominently, I do it as a courtesy. A lawyer's comments on these matters should carry more weight than my own. Second to that, one might characterize me as nervous and pedantic about such things.
  - bonestamp2 9y ago
    Fair enough.
gamblor956 9y ago
It's not against the law for non-lawyers to give advice about legal matters, unless they're doing so in a specific legal context (i.e., a courtroom) and they're either claiming to be, or holding themselves out to be, a competent advisor on legal matters. For example: John Smith can tell his friends whatever he wants about the law, including specific legal matters like DUIs, as long as John Smith doesn't claim to be a lawyer. So please stop including that disclaimer in your comments. Edit: Since the HN armchair lawyer brigade is apparently misinterpreting my comments: continue to say that you are not a lawyer, but stop saying that you are not providing legal advice because you are, so claiming that you are not offering legal advice has no legal effect. I am a lawyer. I am not your lawyer.
- daveguy 9y ago
  When giving advice of a legal nature it is important for the recipient of that advice to know that it is not coming from a lawyer, but a lay interpretation. Please keep including that disclaimer in your arguments. Especially when discussing what you would do in a legal or tax setting. Also, if you are not a doctor, but are giving your personal medical recommendations, please specify that too. It is as much to inform the recipient of the advice quality as it is to cover the giver of the advice.
  - deleted 9y ago
    [deleted]
loeg 9y ago
It's a white collar crime. Probably no jail time, just fines and community service.
- tatersolid 9y ago
  Many people in recent history have done serious multi-year sentences for evading taxes on amounts well under $1M. The same is likely true for violations of OFAC, BSA, and AML laws. Even minimum security prisons aren’t a lot of fun, and good luck re-starting anything resembling a career or life when you’re released.
dsfyu404ed 9y ago
>Disclaimer: I am not a lawyer. This is not legal advice. Pay your taxes. http://i.imgur.com/4CofAk7.jpg http://i.imgur.com/4CofAk7.jpg You aren't even willing to discuss the subject in a pro-"abide by the law" way without a CYA. Chiling effects indeed...

saas_co_de 9y ago

far from true. the IRS passes on many enforcement actions because the cost-benefit calculus doesn't pencil out against wealthy and sophisticated parties who can afford to spend years in litigation. The bulk of IRS enforcement is against low income people who cheat on child tax credits and earned income credit. The nature of all predators is to attack the weak.

showerst 9y ago
I don't see enough data to parse the claim about the IRS ignoring the wealthy, but the second seems to be false, here are some sources: https://www.irs.gov/statistics/soi-tax-stats-examination-coverage-individual-income-tax-returns-examined-irs-data-book-table-9b https://www.irs.gov/statistics/soi-tax-stats-examination-cov... https://www.irs.gov/statistics/soi-tax-stats-civil-penalties-assessed-and-abated-by-type-of-tax-and-type-of-penalty-irs-data-book-table-17 https://www.irs.gov/statistics/soi-tax-stats-civil-penalties... The vast majority of audits are of those making > 1,000,000 in income, and the average enforcement is more than $10,000. Even with a few mega-enforcements to skew the numbers, the "bulk" of enforcement can't be against low income people, they don't owe enough to make the math work out.
- saas_co_de 9y ago
  So, let's do the math: on link #2 "Civil Penalties Assessed" for 2015 for Individuals there were 31,808,876. Since there are only 3.7 million households making over 250,000 per year (https://en.wikipedia.org/wiki/Household_income_in_the_United_States https://en.wikipedia.org/wiki/Household_income_in_the_United...) even if 100% of wealthy individuals had enforcement actions, they would only account for ~10% of enforcement actions. So that is one data point. If you go back to link 1 "Examination Coverage" you will see that the highest percentage of examinations amongst low/middle income people is for people with 0-25K income, which would coincide with precisely with the Earned Income Credit. These examination percentages are also highly misleading because for simple low income tax fraud, like I am talking about, it is mostly detected by computers and they only "examine" it after they already know there is an irregularity.

orblivion 9y ago

This sounds like the opening sequence for COPS. "Crime doesn't pay". I suppose if they hire the NSA they can get you on anything.

Kiro 9y ago

I don't understand what taxes you could possibly avoid by putting money in Bitcoin. Enlighten me please. Are we talking about companies here?

bklyn11201 9y ago
Buying a stock or Bitcoin is not taxable. Selling an appreciated stock or asset is taxable. If you bought 100 Bitcoin for $900 each in January and sell it for $9000 each in December, you owe the federal government 39.6% x ($9000 - $900) * 100 bitcoins
- Kiro 9y ago
  Is this what we're talking about though? I got the impression it was about using Bitcoin to avoid other taxes.
  - bklyn11201 9y ago
    Sure, it's exactly what we're talking about. The IRS says less than 1000 citizens claimed Bitcoin appreciated capital gains, but Coinbase has 14,355 US citizens who transacted more than $20k. Surely there are a few thousand people in there not reporting their appreciated gains from Bitcoin sales.

Nokinside 9y ago

>Launder your coins? You bet they can track that. They don't have to track it. Money laundering laws usually have reverse burden of proof. They seize your money. Then you have to explain it's origin or you lose it for good.

stale2002 9y ago

People have been saying this ever since Bitcoin was invented. But has it been proven true? It seems like for all this big talk about how the government is all powerful, a whole lot of people have been able to get away with a lot of stuff. This also isn't just about the US. This is about other countries as well. Venezuelans have been using Bitcoin very effectively to get around government oppression and capital controls, for example.