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Relatedly: DO NOT CHEAT ON YOUR TAXES. If you have any BTC profits and do not report them to the IRS this month, they are reasonably likely to catch you and mak

• fudWrecker 13y ago
  YOU ARE WRONG. The IRS is .1% in the business of audits and 99.9% in the business of scaring people about the possibility of an audit. Like you just did.
  • sillysaurus3 13y ago
    That would be 1 in 1,000 people. If a million people in the US have used bitcoin, then that would mean 1,000 of them are going to be audited. That's quite a lot of audits. And sure, 1 in 1,000 is nice odds, but you're still breaking the law. And some people care about not breaking the law on principle. Also, if you do something the government doesn't like, then they can retroactively investigate you and bring the full force of the law down on you for tax evasion, which carries harsh penalties.
  • qdog 13y ago
    I have no bitcoin, but I've been audited. Unless your intent is to avoid taxation and you don't mind the risk, you should definitely pay tax on any bitcoins you've mined.
  • drags 13y ago
    I'm being audited right now (over a $2,500 student loan interest deduction, of all things) and it's totally automated. It seems like they have an internal process that goes "Taxpayer claimed deduction, IRS doesn't have paperwork matching payment activity, ergo send letter asking taxpayer to pony up". If Coinbase is going to report earnings to the IRS, it's a good idea to match what they report or you might trigger the algorithm.
    • stonogo 13y ago
      What you are describing is not an audit. The automated system is a separate process. An audit involves an actual IRS agent manually reviewing your entire tax history for the given year.
      • albedoa 13y ago
        At least at the state level (MA), the automated system is considered an audit. I recently received notice that an "audit" (their word) of my state tax return detected a discrepancy with my federal return. When I called, I was told that it was caught automatically. So I think the manual and automatic processes are considered to be two forms of the broader term "audit".
        • stonogo 13y ago
          The IRS does not work for the state of Massachusetts.
          • albedoa 13y ago
            We know this. I was explaining to you what the word means by example.
      • larrys 13y ago
        Read this: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/IRS-Audits http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employ... "An audit may be conducted by mail or through an in-person interview and review of the taxpayer's records." "You will be provided with a written request for specific documents needed." "An IRS audit is a review/examination of an organization's or individual's accounts and financial information to ensure information is being reported correctly, according to the tax laws, to verify the amount of tax reported is accurate." Consquently by my interpretation (and actual experience over many years) your last sentence is not correct.
        • mikeash 13y ago
  • genwin 13y ago
    The IRS is 100% in the business of noticing when your tax filing doesn't jive with the numbers others reported to them about you. To have low risk of getting caught with unreported Bitcoin gains, you'd need to sell anonymously.
  • kolev 13y ago
    Keep in mind that they don't have to do this this year - they have 7 years to catch you evading tax in 2013.