Bitcoin Forum

It's 364 days until most Americans will once again face a deadline to file their taxes, but Teresa Warmke already has a plan for Tax Day 2014: She's going to skip the whole thing.

The treasurer of a limited liability company, Warmke has struck on what she celebrates as a novel way to avoid any audit trail -- and thereby any liabilities to Uncle Sam. Goodbye American dollar, hello bitcoin.

“We don’t intend to file tax paperwork any more,” Warmke told The Huffington Post Monday, as many others scrambled to fill out tax forms or stood in long lines at the post office. “We’re not going to do business with the government from now on.”

http://www.huffingtonpost.com/2013/04/16/bitcoin-taxes_n_3093182.html

Founders Note:
I believe Teresa is going to get a visit from the IRS having her name in lights doing crap like that.

Ain't no accounting for stupid...

It'll force the IRS to issue some more detailed tax regulation on Bitcoin though.  In my mind, that's a good thing, as it'll lend additional credibility to Bitcoin.

Yes.  Absolutely.

poking the bear, i believe is the term that applies.

this is where proper security comes into play.  mixing your coins (or "shared" send / receive on blockchain.info/wallet) is crucial.  but even that won't help if your electronics lead to determining transactions, like invoices in e-mail even when paid for with bitcoins, phone calls to donors who paid using bitcoins, etc.

things like using only an encrypted filesytem and session locking are requirements otherwise someone gaining physical access to the hardware would give up the forensic clues to know which addresses had been used.

Throwaway domains...

http://qubes-os.org/Home.html

Guys, Girls,   

Encrypting file systems, throw away domains, etc.. this is not the right thing to do... it will only paint anyone that uses bitcoins as a SilkRoad using, Tax Evading drug runner...

The best solution is to pay your taxes.

+1

Absolutely pay your taxes.  Last year I paid 20% long term capital gains on the few thousand I cashed out (needed a car).  Haven't heard back on that - so in the absence of feedback I'm figuring it was OK.

This year I'm not planning on any cashouts to declare.

But just because you pay your taxes doesn't mean that any unrealized holdings are anybody else's business, including the IRS.  And I'm generally very privacy oriented - especially where my computer is concerned.

http://www.fr33aid.com/1163/fr33-aid-abandons-irs-application-qa/


Its not personal income taxes, just for the non profit.

I wonder how much (deluded) people embrace bitcoins as a tax evasion medium

I'm not sure this is tax evasion.

No. Only pay them if forced to. The approach taken by fr33 is the correct one.

Maybe she's betting that by the time she's audited, her profits will be greater than penalties?  ???

There are no profits.  It's an organization that provides free healthcare.

Screwing with the IRS is akin to taking a gun to your head.    They have zero problem tossing you in jail for not reporting profits made from bitcoin.  

It just takes a phone call to Mt.Gox from some random IRS agent to get all reports of what you bought or sold there (or any other exchange for that matter).   I don't give a shit if Mt.Gox is in Japan....  because that same IRS agent would call their counterpart in Tokyo and then the Japanese version of the IRS would do it.

The IRS doesn't recognize Bitcoin as money. Yet.

Where have you been for the past 2 months?

They view it as a foreign currency,  which means they DO view it as money.

   

The IRS is a private organization not actually part of the U.S. Government... It's a corporation just like any other designed to make money, to bad most of the money made is actually going back to U.S. taxpayers. (Here lies the problem with America as a whole) America is a business.

The problem as I see it is everyone is caught up with the almighty dollar, shouldn't it really be about the advancement of Humans as a species?
When Money gets in the way of groundbreaking research because it's to costly then there really is an issue.

No, they view it as a currency substitute. That's not "money" in their eyes anymore than a warehouse would be considered "money". They might still claim regulatory power over it but they still don't see it as money.

 

If I can get taxed on it,  it's money.

Your house isn't money.

I, for one applaud this womans foolish bravery.

Yes, sort of.  The big question isn't whether or not you get taxed on it - the question is:  taxed as what?

Commodity, currency, income?  Is there a difference between mining and speculative acquisition?

We're only a tiny bit of the way to understanding how the tax structure will treat bitcoin.  And frankly - given the way the G reacts to new things - we're probably more aware of all the possibilities than the IRS is, at this point.

The best part is if they try to seize the computer she has Bitcoins on they won't be able to get at her money and she technically won't owe taxes guys because Bitcoin is entirely seperate from the state, the only way they could get it would be if they legalised it and played by our rules which would then mean of course the dollar completely crashes and the central banks lose their power. I think more of us should try and go as purely Bitcoin as possible because if we start trying to play along with everything they do then there's no point in having Bitcoin in the first place.

If they want my money, they're going to have to play by my fucking rules now.

And American bitcoiners have zero problem moving their ass/assets to a nice country like Panama!

Burn in Hell IRS.  Justice is coming.  Soon:

http://en.wikipedia.org/wiki/Assassination_market

the bank seems to think it is money...  everytime they send me a "take out a second mortgage" pamphlet.

dude, you know we're both right...   It isn't a greenback,  nor is it a euro... but it does have an easily tradeable value.. it's digital gold or silver.. .which both btw have a currency code...  XAG for silver,  XAU for Gold... platinum and palladium both have one as well.   That Government ruling on guidelines does state that it's being regulated as foreign currency.   Which means that it's pretty much a currency without the official BTC attached to it...

IF YOU PAY TAXES, YOU HAVE BLOOD ON YOUR HANDS

str4wm4n = MY HERO!!!!!!!!!

Righ. So it's not clear to me that only paying a 20% capital gains tax isn't still tax fraud. I mean, if I sold my old gym shoes for $10000, would I pay capital gains on that or regular income tax (which could be much more or much less)?

I understand this position but do not agree with it.

Someone who is acting under duress  is not morally responsible for the actions taken to avoid being harmed. The responsibility belongs to those who are pointing guns at people and telling them what to do.

In the absence of any specific ruling by the IRS, you're right.

BUT, if you pay that 20% as the most reasonable option, and they come back at you, the fact that there was no clear ruling will limit what nastiness they can try.  Intent means something.

The patriotards will be the undoing of Bitcoin ever gaining legitimacy.

Honestly, I think that bitcoins should be treated as cash. They are both anonymous and can be acquired without the government knowing. But as with jobs that pay in cash, you still have to and always had to pay taxes to them, and you still should, to keep everyone happy.

I know Teresa and Fr33Aid well. I think they are doing this right.

Fr33Aid accepts donations and doesn't pay the workers who are all volunteers. All the donations are used for is expenses, like a defibrillator and bandages. Fr33Aid is also well connected to many knowledgeable new media experts like Free Talk Live.

If the IRS comes down on Fr33Aid it will hit the social networks like a ton of bricks, showing just how harmful the IRS is. The IRS has nothing to gain from this and lots to lose, and I know the folks running the organization are smart enough to mention that to the first agent that messes with them.

However, what we've seen in this thread is timid little quislings who are eager to pay their taxes out of pussy fear.  If you do that you enable more drone bombings of weddings in your name.  Seriously, if 7 billion people on this planet quit going along this madness will stop.

You are so naive and arrogant, its painful.

Who gives a shit what "new media experts" this person knows? Whatever the hell that means beyond having a large twitter "following". Oooooh.

Do you think the IRS gives one good god damn about perceptions? What does the IRS have to lose? Tell me.

The quisling statistards will be the undoing of centralized governments ever gaining legitimacy.

Bitcoin is entirely out of the jurisdiction of the corporate USA. If all you earn is bitcoin, and you don't cash it out - you don't owe the IRS one Satoshi.

Now as soon as you sell them for FRNs - THEN, and ONLY then, do you have to worry about the government trying to steal from you.

The IRS rules by fear and intimidation, in fact they actively promote scare-mongering of how bad-ass they are to intimidate people into over-paying ... look ow muc angst is been expounded in this thread alone ... "don't mess with those guys", etc

now ask yourself this, are you comfortable with an organisation, in a liberal democracy, that has the basis of its function the rule of fear?

It is a pretty sure sign that an agency has become malignant when it rules through fear ... this is no longer a benign peace-loving agency but a malignant force and you would be complicit not to admit that and do whatever you can to oppose rule of fear.

But who voted these parasites into office?

And who allowed these children to vote that way?

Statism is one big clusterf*ck that must be destroyed from the bottom up. You can't just "take out" the IRS or any part of the government, even if you had superior firepower... With their propaganda campaigns still in play (and yes, that includes both the media and all public schools) the vast majority of sheeple will always fall for the same tricks as the ones that voted in the current batch of murdering psychopaths.

Peer-to-peer everything is the only way forward.

• Fight their economy by decentralizing money. (Bitcoin)
• Fight their propaganda by decentralizing media. (Torrents, TOR, and Mega)
• Fight their corporation-driven laws by decentralizing product creation. (DEFCAD)
• Etc.

IMHO, the only way we can finally NOT have blood on all our hands is by embracing P2P tech fully, and seeing the state be made illegitimate as they lose all their power.

I will write that down and fucking frame it.

The headline of the article is "Bitcoin Celebrated As Way To Avoid Taxes"

Is "avoid" not synonymous with "evade"?

Yeah, all that negative attention would really damage the IRS brand!  That'll show em!  Wait, that makes no fucking sense, every single person in the USA already hates the IRS with a fiery passion.  The IRS has NOTHING to lose.

+1

Please go to the primary source (the website of this woman's organization). The headline of this article is misleading. I am not sure that this organization needed to file with the IRS to begin with, they were only doing so because banks would not allow them to have an account without doing so. Then again I am not a tax expert.

No.

Evading taxes: i.e., not paying, running from or hiding from them.  That's good for jail time.

Avoiding taxes: i.e., arranging your finances to pay the least taxes possible.  That is quite cricket in the US, and protected by several SCOTUS decisions.

I disagree.  If you're doing business within the US, regardless of what unit you use for trade, it can at the very least be considered barter.  And you DO owe taxes on barter.

Thanks for clarifying that.  Could you show me the law that says that, please?

Also it sounds like they would not have to pay taxes anyway. What they are avoiding is filling out a bunch of paper work.

Even non-profits have to file taxes ,  they are mostly exempt of course,  but they are still required to.  

Their tax form looks like this (except 10,000% bigger with 300 pages of bullshit)

1 - donation income and cash equivalents -   100 dollars
2 - expenses -  20 dollars
3 - advertising expenses - 10 dollars
4 - proceeds forwarded to X - 70 dollars

Tax owed - 3 dollars for X and Y and Z

Everyone else has this tax form


1 - income and cash equivalents -   100 dollars
2 - expenses -  20 dollars
3 - advertising expenses - 10 dollars
4 - product inventory expense - 70 dollars

Tax owed - 30 dollars for X and Y and D and U and W and Q and Form 45992-a13 and Z .. oh don't forget Form 39930193990 A-4 and supplement A-6

In other words they still owe taxes,  abit much less.   Not listing bitcoin as a cash equivalent or a barter or whatever would land them right into jail.



 

I couldn't cite for you the specific law, but if you want details, read away...!
http://www.irs.gov/taxtopics/tc420.html

Yeah you're right about that.  Sounds like they're just being lazy.  I would be pissed if I donated money to them and they pulled this BS.  Even if they keep all their money in BTC, the IRS can still freeze their USD account and since nobody accepts BTC for expenses right now, they could potentially have a bunch of donations that they are unable to use.  If you're a non-profit, just fill out the paperwork. 

But instead they whine "oh noes, I made the mistake of setting up a charity as a for-profit LLC and now it's bunch of work to get it registered as a nonprofit so I'll break the law and try to hide my donations, because somehow, that is less work than just filling out the damn forms."

Hmm, maybe you shouldn't have set up a charity as a for-profit LLC in the first place and the government actually isn't the bad guy here, you just made the mistake of not doing your research before you started a company.

The reporter failed to even view the basic information available on the bitcoin.org home page, http://bitcoin.org/en/you-need-to-know (http://bitcoin.org/en/you-need-to-know)

according to the link it is NOT treated as FOREIGN CURRENCY, however it does meet the criteria of a "convertible" virtual currency in the three types listed above that reference as either:
 a.) E-Currencies and E-Precious Metals
 b.) Centralized Virtual Currencies
 c.) De-Centralized Virtual Currencies   - an exchange like Mt. Gox would fit either b. or c. here but I can't decipher which one it would be by the way its worded but it is definitely NOT treated as a legal tender foreign exchange currency... you would have to trade two legal tender foreign pairs to be considered so

...so what do think is it b. or c.?...

and yet there's still this-under a.)e-currencies


...therefore miners who exchange part of their btc count to cash  to pay utility payments might be considered money transmitters but not foreign currency exchangers...... either way it will be taxed !

You guys realize it doesn't matter what we establish in this thread the end result comes from the IRS who will decide what is good and what is not

You're in love with the IRS aren't you? ... go on you can admit it, you love the authority, security and stability they bring to your world, in fact your dream job is as an IRS agent isn't it?

Edit: this might interest you http://www.tennessean.com/article/20130418/NEWS03/304180073/24-IRS-workers-TN-accused-theft?nclick_check=1 (http://www.tennessean.com/article/20130418/NEWS03/304180073/24-IRS-workers-TN-accused-theft?nclick_check=1)

ROFL!!  until 1910 we didn't even have a need for the IRS,  it's a problematic monster that complicates life to the point of making it very difficult to start your own business.    Prime Example,  if I wanted to start up a bitcoin to USD exchange today...   I have to allocate at least a million or more to compliance just to get off the floor.   

Audits,  etc etc... 

I agree 100%, I mean isn't this in a sense similar to laundering money?

I don't see why... it's treated the same as being paid in gold or another commodity, really.

If someone goes and collects silver or gold at their storefront and does not report them..  see what happens... eventually they'll come knocking on your door asking how you paid your employees and how did you pay your social security taxes and your X and Y taxes...

Not only that buy one pays a special "collectibles" premium on metals, a capital gains rate up to 28%.

um, yeah, that link isn't to any LAW. Not to mention the fact that not only is the idea completely ridiculous, but its totally unenforceable.

So glad to see that some people get this! I always get so frustrated when people propose new laws, new agencies and new politicians as the solution, when those clearly are responsible for this clusterf*ck.

Hey, I didn't claim that people are actually reporting on it properly!

I'm sure it is based on tax law.  The IRS isn't going to go writing up guides on taxation that doesn't match the laws that are in place.

LOL...uh-huh...

I think you need to learn the difference between corporate policy and LAW. McDonalds can tell its franchises that they need to sell the new McBarf sandwich and put a sticker for it in the window (policy), but that doesn't make it a law.

But now we're getting into how the government actually works, which isn't understood by those who got indoctrinated in public school with fantasies about the Constitution and founding fathers.

My suggestion is to grab a copy of a book called "Cracking the Code, 3rd ed" and read it twice.

Law is an opinion with a gun behind it.

Policies are a synonym for law when the people making them will shoot those who don't comply with their demands.

The fantasy is thinking that the Mafia will stop acting like a mafia if you can just find the right sequence of magic words to make them lose interest in robbing you.

The IRS isn't a corporate entity, as far as I am aware.  Also, as far as I am aware, they are the ones to enforce laws with regards to taxation.

Again, the IRS isn't going to go writing up guides on taxation that do not match the laws that are in place.  If you think they will, then feel free to prove me wrong.

I think you will find that both the IRS and the Federal Reserve were originally set up as corporations in 1913.

Why is it that whenever someone talks about not paying taxes, someone inevitably has to mention the fact that they are going to get audited or they are going to go to jail. That is sort of a given is it not? Why perpetuate the IRS's fear game for them?

When someone online talks about smoking pot or doing drugs it is not immediately followed by "You're so going to get a visit from the cops and your ass is going to be in jail".

Why is breaking one law followed by reminders of jail while breaking another law is just considered living your life differently than others?

Because the cops are, generally speaking, jokers. The IRS are not. Their ability to audit is impressively scary, trust me.

You're actually incorrect about this.  Go on a drug forum and you will see everyone saying things like "SWIM took acid, it was awesome, SWIM felt like the world was the most beautiful place....etc etc".  SWIM stands for "Someone who isn't me".  If you say something like "I took acid" you will get banned from the forums and people will call you an idiot for admitting to doing something illegal on the internet. 

Haven't you seen those stories of kids who post pictures of themselves doing and making drugs on Facebook and got arrested for it?  Google around.  The cops are on the internet.

Here are some funny ones: http://www.huffingtonpost.com/2010/08/16/arrested-over-facebook-po_n_683160.html#s127052&title=Mother_Arrested_Over (http://www.huffingtonpost.com/2010/08/16/arrested-over-facebook-po_n_683160.html#s127052&title=Mother_Arrested_Over)

+2

I will wait to see the thread on here pointing out this bitcointalk post and how the DEA will be paying this person a visit:

I would NEVER advise anyone to not pay your taxes.

Just remember to pay your taxes to the correct authority. Sometimes this seems confusing to people, so I took the liberty of drawing up this little chart to help everyone out with this issue:


https://i.imgur.com/DO4GFua.jpg

This is precisely why companies like Bitspend make so much sense, that way Bitcoin users won't have to worry about taxes at all :P at least for most things, looking forward to when they do subscriptions.

Nice article.  Sadly though I believe 100% that she is wrong. If the government (IRS) wants her to pay taxes she is either 1) paying taxes or 2) going to jail. Period, end of discussion. That's just the reality.

You can fight the IRS if you want and claim you don't have to pay taxes. You aren't going to win though.

I'm no tax expert of finincal expert...but once you convert bitcoins to dollars why would you not have to pay taxes on those dollars. How can you say you don't have pay taxes on US Currency.

If somehow everything was done in bitoin, donations were in bitcoin and she bought all the supplies in bitcoin, paid for the hotels and trains in bitcoin. Then I think she might have a decent arguement.  Of course not that many places accept bitcoin right now so that's simply not a reality.

Also I agree with the OP. Putting yourself in the spotlight this and saying you aren't going to have to pay taxes is a great way to piss off the IRS and make them say "oh really???? we will see about that".  The IRS like anything else in life doesn't like to be made a fool off, caling them out an challenging them on this is a great way to just cause more problems for you.

word. while the creators and original adaptors of bitcoin may not like the idea of taxes and government involvement with bitcoin it certainly would make it more mainstream and legitimate imo.

Just playing devil's advocate here and I'm not saying that it would be easy to do it, but wouldn't it be better to pay for the car in BTC?
(Just as long as any delivery charge / travel costs for finding someone that will accept BTC is less than the 20% you'd have paid in capital gains.)

Really? I haven't paid taxes since 2004. Haven't even got a letter from them. I don't think they know who I am.

Of course, I never sign any of their paperwork.

Bitcoin is no different from cash as far as taxes go. It's not "The End of the State." If you are going to evade taxes and announce it publicly:  ::)

Her not paying taxes means we all have to pay more. She's not my hero.

The possessive "its" does not contain an apostrophe.

When miners have no more coins to mine and make a living on tx fees. They will become our tax collectors leaching Bitcoins out of the economy!

Why does everybody keep thinking governments can't tax bitcoins... on whatever you buy, the company you bought it from, still has to give 21% VAT (here in Holland, if customer in EU based only) whenever your salary gets paid in bitcoin, government is still going to grab the amount of tax they want, before you get your bitcoins in your wallet. Its just going to make the life of accountants a million times simpler, txn in the blockchain, it happened :) Double-spend, impossible to hide. (and will not be possible very easily)

Still not sure if they'll survive when they can no longer print money. (since nobody accepts their money anymore)

And, what, laboring and paying to do a bunch of stupid, unnecessary, wasteful and dehumanizing government paperwork is fucking virtuous?

Damn. And here I thought it meant we'd just get less of neat things like bombing brown people all over the planet, jailing generations of minorities, bailing out the quadrillion-dollar fraud that is the financial sector, raising populations of authority-worshippers, IRS agents, &c., &c.

Guess I was wrong.

You seem to be making the assumption that people necessarily or generally want to be fully-regulated participants in the state-blessed "legal" economy.

If that's so, why?