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On my end, I made the assumption that the IRS was going to get this data, anyway. Though Coinbase doesn't fall under the same blanket as my bank, with the way

by mdip 9y ago

On my end, I made the assumption that the IRS was going to get this data, anyway. Though Coinbase doesn't fall under the same blanket as my bank, with the way they operate and what they do, it's only a matter of time before they're required to provide the same records that my bank provides -- 1099 and other tax-related forms. No transaction you perform with a typical bank is secret, that data is used to determine what you must pay in taxes and the IRS is rather consistent in getting that information and coming down hard -- even on small tax cheats -- when you fail to report your earnings properly. I'm just "the little guy" and that $3,000 or so of ETH that I cashed out will be appearing as a line-item on my tax filings in the early part of next year. It's a stupid thing to pay a penalty/fine on. I'm not a fan of how we're taxed in this country or how the IRS operates[0] but I'm not interested in trying to solve the problem by attempting to get away with breaking the (bad) laws and as someone with friends who have tried to get away with such things and lost pretty horribly, I'll learn from other's mistakes rather than make them myself. When I saw that they asked for all of Coinbase's records, I not only wasn't surprised -- I fully expected they'd actually get all of them. While I'm glad that I was wrong in that expectation, it's not something that should motivate anyone into thinking they'll fly under the radar with unreported earnings. Now ... how on earth I am supposed to claim this income -- all made from mining, not "purchased" using currency -- will have to be figured out by my CPA. I'm just glad that all of my coins are old enough that they (hopefully) qualify as long-term capital gains, but IANACPA. [0] It always seemed curious to me that financial transactions -- provided they go through a bank (which the vast majority of them do) are effectively free of 4th Amendment protection, and it bothers me that tax related crimes are handled unlike any other crime in the US -- an IRS audit is, effectively, "We think you're guilty; prove to us otherwise or pay the fine"

vel0city 9y ago
In relation to your footnote, banks are third-party and would clearly fall under the ideas of third-party doctrine[0]. While this was only clearly put into place in relation to telecom in the 70s, this basic concept has existed in common law for a long time. [0] https://en.wikipedia.org/wiki/Third-party_doctrine https://en.wikipedia.org/wiki/Third-party_doctrine
- mdip 9y ago
  The law is a funny little thing. The thing I take more issue with is the concept of how audits are handled -- "guilty until proven innocent". I have a friend who runs a seasonal cash-only business who got audited about 5 years ago. If you knew this individual, personally, you wouldn't waste your time auditing him -- he's a super-conservative Christian fellow, who, while not being terribly big fans of The Government -- wouldn't cross even the slightest gray-area as far as ethical, let alone legal, boundaries are concerned. He hired a CPA to do his family's taxes and I guarantee he had receipts accounting for every single penny, but owing to his frugality, he appeared to have a larger lifestyle on the outside than could be accounted for with his earnings[0]. The audit went on for the better part of a year with him having to prove that he wasn't hiding income. In the end, the IRS was satisfied due to his careful record-keeping and he managed to get a few dollars back by revising his return and accounting for some deductions that he decided not to take ... out of fear of being audited[1]. [0] This is a guy who in 2001 showed me a $600 grocery bill that he paid only the sales tax on due to his careful Couponing. He also lived in his own (mortgaged) home when he was 19-years old and was only making $7.50 an hour (which, while I don't live in Silicon Valley, the area he lived in was not "inner city" and there's no way I can do the math to figure out how he pulled it off, let alone found a bank to give him a loan). [1] And having beat the audit, he never fails to take any deduction that he is eligible for.

by mdip 9y ago

vel0city 9y ago

In relation to your footnote, banks are third-party and would clearly fall under the ideas of third-party doctrine[0]. While this was only clearly put into place in relation to telecom in the 70s, this basic concept has existed in common law for a long time. [0] https://en.wikipedia.org/wiki/Third-party_doctrine https://en.wikipedia.org/wiki/Third-party_doctrine

mdip 9y ago
The law is a funny little thing. The thing I take more issue with is the concept of how audits are handled -- "guilty until proven innocent". I have a friend who runs a seasonal cash-only business who got audited about 5 years ago. If you knew this individual, personally, you wouldn't waste your time auditing him -- he's a super-conservative Christian fellow, who, while not being terribly big fans of The Government -- wouldn't cross even the slightest gray-area as far as ethical, let alone legal, boundaries are concerned. He hired a CPA to do his family's taxes and I guarantee he had receipts accounting for every single penny, but owing to his frugality, he appeared to have a larger lifestyle on the outside than could be accounted for with his earnings[0]. The audit went on for the better part of a year with him having to prove that he wasn't hiding income. In the end, the IRS was satisfied due to his careful record-keeping and he managed to get a few dollars back by revising his return and accounting for some deductions that he decided not to take ... out of fear of being audited[1]. [0] This is a guy who in 2001 showed me a $600 grocery bill that he paid only the sales tax on due to his careful Couponing. He also lived in his own (mortgaged) home when he was 19-years old and was only making $7.50 an hour (which, while I don't live in Silicon Valley, the area he lived in was not "inner city" and there's no way I can do the math to figure out how he pulled it off, let alone found a bank to give him a loan). [1] And having beat the audit, he never fails to take any deduction that he is eligible for.