5 ms·

"No", respond taxpayers. How do they intend to record this?

by roddux 9y ago

kgwgk 9y ago
How does the non-compliant taxpayer intend to justify the origin of the money when BTC hits $1mn or whatever and he buys a lamborghini and a penthouse?
kentm 9y ago
Coinbase and other crypto exchanges report to the IRS for one. There’s also forensic accounting where large unexplained cash flows (i.e. buying a house for money far above your income level) establish probable cause, which allows them to go fishing.
- markonthewall 9y ago
  It's actually trivial to dodge US taxes. The most basic and effective way to accomplish that is to establish fiscal residency in a friendly european country. It becomes /really/ easy when you have dual citizenship. Same applies for crypto gains, if you avoid using US based crypto-exchanges you are probably OK for the foreseeable future. I have found that many americans overestimate the reach, competence, and sheer willpower of the IRS. You would be surprised at what /doesn't/ happen if you stop filing taxes.
  - kentm 9y ago
    I probably am overestimating their reach. I would imagine the willpower scales proportionally with the amount of lost revenue minus the cost of pursuing. I’m sure a lot of people in crypto think they’re cleverly covering their tracks when they’re not, and it really comes down to whether or not the IRS notices. Personally I don’t want to roll the dice.
  - chx 9y ago
    > You would be surprised at what /doesn't/ happen if you stop filing taxes. You are right: the sun would still rise everything morning, life would continue pretty much unchanged, no one would break down the door to haul you away for not filing your return. This is not Hollywood. But a little envelope could show up in a year, two years -- or twenty years. If you do not file there is no time limit on collection of taxes, interest and penalties. https://www.irs.gov/irm/part5/irm_05-001-019 https://www.irs.gov/irm/part5/irm_05-001-019 Maybe you are living in a van now and getting cash on the nail and can't care less. But... what if you clean up in ten years and want to live better? Even a zero return is better than no return. And if you do not live in a van but have an actual income with a paper trail, the IRS might just file a Substitution for Return on your behalf and then, if you do not respond, they will, with the full force of the law, come after what they think you owe them, putting a federal tax lien on your real property, garnishing your wages and so on. Once you or they filed a return, there's a ten year time limit on collecting the money, but, again, that doesn't apply if you do not file. What really doesn't happen is criminal tax evasion charges. That's truly rare and reserved for the heavy hitters.
  - deleted 9y ago
    [deleted]
r00fus 9y ago
It's not that they particularly have a way to record this though if you happen to convert your earnings through a US based exchange, ostensibly they could track you. It's that if they do catch you you are signing up for lots of fines and or imprisonment by not previously declaring.
matthewmacleod 9y ago
I would imagine using the same mechanisms they use to track down unrecorded income from other sources.
austinshea 9y ago
Lots of people cheat on their taxes. This isn’t different than any other form of undeclared income.
sergiotapia 9y ago
Normie trading platforms are required by law to report to the IRS. That's how.
GenericsMotors 9y ago
> "No", respond taxpayers. "K, enjoy prison. And the fines. And interest." > How do they intend to record this? Coinbase shares data with the IRS. I imagine Kraken will also, as they are US-based. Maybe you've used a foreign exchange that isn't obliged to share this data with the USG, though if you've received large fiat sums to your bank account you may have raised some AML flags already...
- deleted 9y ago
  [deleted]
Spooky23 9y ago
Through enforcement. Although the Congress has been de-funding IRS enforcement for some time, States, especially states being impacted by tax policy changes are making investments in increased auditing.

"No", respond taxpayers. How do they intend to record this?

by roddux 9y ago

"No", respond taxpayers. How do they intend to record this?

How does the non-compliant taxpayer intend to justify the origin of the money when BTC hits $1mn or whatever and he buys a lamborghini and a penthouse?

kentm 9y ago

Coinbase and other crypto exchanges report to the IRS for one. There’s also forensic accounting where large unexplained cash flows (i.e. buying a house for money far above your income level) establish probable cause, which allows them to go fishing.

markonthewall 9y ago
It's actually trivial to dodge US taxes. The most basic and effective way to accomplish that is to establish fiscal residency in a friendly european country. It becomes /really/ easy when you have dual citizenship. Same applies for crypto gains, if you avoid using US based crypto-exchanges you are probably OK for the foreseeable future. I have found that many americans overestimate the reach, competence, and sheer willpower of the IRS. You would be surprised at what /doesn't/ happen if you stop filing taxes.
- kentm 9y ago
  I probably am overestimating their reach. I would imagine the willpower scales proportionally with the amount of lost revenue minus the cost of pursuing. I’m sure a lot of people in crypto think they’re cleverly covering their tracks when they’re not, and it really comes down to whether or not the IRS notices. Personally I don’t want to roll the dice.
- chx 9y ago
  > You would be surprised at what /doesn't/ happen if you stop filing taxes. You are right: the sun would still rise everything morning, life would continue pretty much unchanged, no one would break down the door to haul you away for not filing your return. This is not Hollywood. But a little envelope could show up in a year, two years -- or twenty years. If you do not file there is no time limit on collection of taxes, interest and penalties. https://www.irs.gov/irm/part5/irm_05-001-019 https://www.irs.gov/irm/part5/irm_05-001-019 Maybe you are living in a van now and getting cash on the nail and can't care less. But... what if you clean up in ten years and want to live better? Even a zero return is better than no return. And if you do not live in a van but have an actual income with a paper trail, the IRS might just file a Substitution for Return on your behalf and then, if you do not respond, they will, with the full force of the law, come after what they think you owe them, putting a federal tax lien on your real property, garnishing your wages and so on. Once you or they filed a return, there's a ten year time limit on collecting the money, but, again, that doesn't apply if you do not file. What really doesn't happen is criminal tax evasion charges. That's truly rare and reserved for the heavy hitters.
- deleted 9y ago
  [deleted]

r00fus 9y ago

It's not that they particularly have a way to record this though if you happen to convert your earnings through a US based exchange, ostensibly they could track you. It's that if they do catch you you are signing up for lots of fines and or imprisonment by not previously declaring.

matthewmacleod 9y ago

I would imagine using the same mechanisms they use to track down unrecorded income from other sources.

austinshea 9y ago

Lots of people cheat on their taxes. This isn’t different than any other form of undeclared income.

sergiotapia 9y ago

Normie trading platforms are required by law to report to the IRS. That's how.

GenericsMotors 9y ago

> "No", respond taxpayers. "K, enjoy prison. And the fines. And interest." > How do they intend to record this? Coinbase shares data with the IRS. I imagine Kraken will also, as they are US-based. Maybe you've used a foreign exchange that isn't obliged to share this data with the USG, though if you've received large fiat sums to your bank account you may have raised some AML flags already...

deleted 9y ago
[deleted]

Spooky23 9y ago

Through enforcement. Although the Congress has been de-funding IRS enforcement for some time, States, especially states being impacted by tax policy changes are making investments in increased auditing.