Bitcoin Forum

Hi.
New user here, been lurking a while but not registered/posted until now.

I have a question about taxing and how easy it is to find me.
I have a few ideas about how to accept bitcoins for a service that I'm thinking about. Nothing big, just a hobby project. Seeing how bitcoins could be exchanged for money I'm sure the government would love to tax me for the bitcoins I make. How easy would it be to find out how many bitcoins was sent to my account? I would generate a new address for each transaction.

Hmm, they'd probably just wait for me to change the bitcoins to $ and tax that when I put it into my bank.
Still, the question stands, is it possible to see which account gets the bitcoins? If I send 100BC to 100addresses, can anyone see that one person got them all?

If the coins are all used together in a transaction later on that would give it away.

I don't have any control about which coins I spend so my best bet would be to put it in some sort of mixing service that I read about in the forum a while ago. Am I correct about this?

Thanks for the answer.

It is possible to work out which bitcoins belong to who, but it requires some effort. The IRS (or equivalent) would not be able to cope with the burden.

You could have the bitcoins sent to a mybitcoins account, and then transfer it to another bitcoins address of your choice, in segments/installments.

Mybitcoins just use one wallet.dat(as far as I know) and keep all details of your transactions and account with them internally(in a database). This would mean a number of bitcoins come and go from this one wallet(everyone who deposits or withdraws bitcoins from them), and there is no way of knowing that any going out are yours as long as you break up the amount.

For example, you get paid 100btc into a mybitcoin.com account, then in maybe 3 payments of 20btc, 30btc,50btc to your own personal bitcoin address. There would be no way to know that those coins are yours except getting mybitcoin.com's account records.

It's actually a kind of bitcoin laundering. Someone will set up an automated service for this soon enough, if it's not done by the summer then I will set one up, call it bit-laundering.com or something ahahahahahaha

It's already here: http://bitcoinlaundry.com/


(not my site)

Heh, that's mine :)

It's simplistic for the moment. No guarantee you won't get the same coins you send, but it does add a bit of complexity to the history of any given coin.

1%, isn't that a bit high? But apart from that, yes this is exactly what I was talking about. Thanks for putting up this service, it means I won't have to.

Oh no, Nefario, if you think 1% is too high then you should be very keen to operate your service for 0.9%.

Instead of going for 3rd parties & laundering services, i think just send your bitcoins to ur account in mtgotx or any other site that holds bitcoin (sorry i made account, but forgot), also another is witcoin, then delete wallet data. create new wallet data & send ur bitcoins to new address from ur acc., problem solved.

Its very hard for govt to tax you.
I am from India & RBI asked paypal to give interest if some one keeps their money on paypal acc. coz it like bank & paypal have to give interest.
To avoid that paypal sent email to indian users to withdraw their money with in 7 days of arriving it, coz its RBI guidelines.
since bitcoin address are anonymous, it very hard to find to whom u send or from whom u receive.
Until u convert bitcoin to ur bank acc & keep on rotation then govt cant able to know it, so cant tax it.
If govt has to tax u then they have to know u have money.
with an anonymous bitcoin address how can they know & prove its ur address & its ur money?

There's another one called CoinTumbler at the Onion address: http://lbrmvt4plqojaulx.onion/

But seriously, how can Bitcoin become ubiquitous without dealing with the tax issue? If it ends up displacing USD or whatever currency is in the country of interest, then the government would essentially get no funding because it is nearly impossible for them to figure out who owns which bitcoins, how me depositing to my "savings" wallet is any different from a commercial exchange, and if specific bitcoins are still even "in" the country or not.

Like it or not, at least some taxation is necessary, so I'm trying to see how bitcoin can succeed when the global scope and decentralization makes it practically impossible to tax? (If this information is out there, please let me know. I've pretty much been reading about bitcoins all week and this doesn't seem addressed.)

So what if it does? Then taxation is not necessary because government as we know it, don't exists. We must reorganize society on a different basis.

For a libertarian, it would seem Utopian, but for everyone else, it seem scary.

Well, a better future is not going to be comfortable and boring, but crazy and scary.

Don't mean to be rude, but do you have kids?

I don't, but if/when I do, I won't be wanting crazy and scary. I want the world get more just, to be more stable, and.. you know, happier.

Crazy and scary does not mean 'dangerous'. By the time we reach that stage, it will be "normal". Of course, today's audience would think it is crazy and scary.

If people knows what's going on in the 21st century 100 years ago, they would think it is the wildest and craziest story imaginable.

That reminds me of what is quite possibly the first apocalyptic sci-fi story ever written, The Last Man (http://www.gutenberg.org/ebooks/18247) by Mary Shelley, who also wrote Frankenstein. First published in 1826, it envisions the years 2073 onward. What's amazing is that they could not possibly have imagined what has taken place between then and now! So, too, we can only barely comprehend what might happen in the next 250 years, but the people of that time will regard us as living primitive lives.

The bitcoin economy will grow and prosper precisely because it has the potential to facilitate a parallel economy that can also operate beyond the scope of taxation. All types of transactions will be attracted to a taxation-free zone because throughout history no- to low-tax zones have always thrived against their counterparts (Hong Kong, US in the 1800s).  This parallel economy will know no political borders so it will not even be clear which taxation authority has the jurisdiction over the economic participant(s).

Even if the proper jurisdictional taxation entity could be reasonably determined, they would still be faced with applying a tax to a reusable proof-of-work 'puzzle'. Firstly, how do you tax a mathematical puzzle without giving it monetary legitimacy?  How do you determine the political borders of the recipient key (if recipient is careful)?  How do you determine the total amount to tax if bitcoin laundries and mixers are used?  Today, an individual can work for bitcoin in anonymous fashion from an undetected geographic location and then spend bitcoin or anonymously trade out of bitcoin.  I don't really see that changing. I'd be more worried about an authoritarian shutdown of the IRC network.

Server Not Found error on the onion address.  Is that correct address?

It is no easier to avoid taxes using Bitcoin than using cash.

They will have  a hard time paying for bombs if they are spending all their time begging for donations. Thats a good thing. I like seeing politicians beg from us rather than the other way around.

Until you have to exchange bitcoins for some other currency to do most of your buying/selling you can't escape taxes any easier then you can without using bitcoins. I order for bitcoins to provide that option you'd need to have job paying in bitcoins and be able to buy/sell most of what you buy/sell in bitcoins.

The possibility is there but we're a long way off. Maybe in 10 or so years.

Are you trying to access it thru TOR?

The government will probably start to regulate/enforce tax deductions on all (low level) employee paychecks.

The people who own the businesses and own the country still get away with paying relatively low/no taxes.

And it's back to your regularly scheduled program.

Taxes are an ACT of government ...

ACTS are NOT LAWS .. they only have to force of law given CONSENT of the citizen.  Since the PEOPLE of every nation today said NO to all government regulations .. they are all unlawful .. and so are the government criminals.

Hence, they only way they GANGS (governments) can TAKE control is at gun point ... so .. lawfully defend  yourself .. 'life, liberty and SECURITY of person and property'

Every community is capable of maintaining itself, its road, health care, etc.

The only reason ANYONE pays taxes today in ANY nation is because of FEAR or CONTRACTS ..... FIAT, government CREATED and OWNED currencies enforced by FORCE.

Paper money ... with their faces on it.  Taxes are THEIR cut of THEIR property that you willingly use for barter/trade.
Worst of all is that almost ALL taxes from every nation do NOT go to the Nation itself, they go to the global bankers that committed crimes against humanity with their corruption.

So .. beyond 'life, liberty, and security of person and propery' ... governments can not lawfully regulate ANY thing they do not create.  Gold, Silver, Bitcoin, etc. non-taxable .. UNLESS .. you SIGN a CONTRACT ... like to create a "LEGAL" (government controlled and regulated) business.

If you trade a FART for a sandwich .. you can NOT be LAWFULLY taxed on the FART .. because you didn't sign a GOVERNMENT CONTRACT.

That's why 90% + of ALL LAWS are CONTRACT LAW.

IE: .. get a job .. any job ... SIGN A GOVERNMENT CONTRACT OF EMPLOYMENT ... requiring you follow THEIR rules.

You choose ... no contracts, except what you create (if any) for yourself ... hence bitcoin is anonymous, just in case the corrupt bastard try to FORCE their corrupt will on everyone ... again.

Governments discovered long ago that taxing is best done through coercing companies not people. As companies grow it becomes impossible for them to lie to government auditors (among 1000 employees there will always be at least one whistle blower). That's why they collect most personal taxes through payroll deductions. That leaves personal income not from payroll. If contractors start hiding their income governments will require the companies that use them report more details about payments. If investors hide income, brokers will report more details. etc...

So the only income you can hide is minor incidental income from personal exchanges. If these grow big (for example from drug dealing) they'll get you when you try to purchase big items from companies that do report. Ever try to buy a house without going through some reputable companies?

You will pay taxes, even if the only currency is Bitcoin.

ffe,

no you won't .. and you don't now your ass from a whole in the ground ... DIRECT TAXATION is ILLEGAL & UNCONSTITUTIONAL by ANY common law rules nation including the U.S. and Canada ..

Since you don't know the laws worth a shit OR how they came to be, keep your miss-informed opinions to yourself ...

Taxes are CRIMINAL .... those who do NOT, consent to, or pay them, are 'patriotic' peoples.

I bet you didn't know that 100% .. 'that means ALL, for you stupid/miss-informed people', of INCOME TAX goes ONLY to interest on the illegal central bank loans to the nation.   Not a single #$@%# penny goes to the nation itself ... nothing ....

Roads are pay for by the oil and gas taxes you pay at the pump/store register .... education and all other community expenses are payed for the LOCAL taxes such as property tax.  But INCOME tax (any direct tax), is a crime in EVERY way .... down to the original criminal 'rulers' that criminally signed the corrupt contracts in the first place.

There are literally millions of people in Canada & the U.S. (including former I.R.S. agents) that do NOT pay them, as well, PUBLICLY admit they do not AND encourage others NOT TO as they themselves have stated .. it's criminal.

"those whom sacrifice there liberties for the illusion of false security, desire neither liberty NOR security" (that was a wise man)

None of it is legal, lawful or constitutional ... so NO ... you do NOT have to pay taxes  ...

this is NOT an opinion .. it is a TECHNICAL & LAWFUL FACT.  PERIOD!

You are right River. Taxes are CRIMINAL. I just meant you will pay taxes because you are being coerced to pay taxes. By force.
Bitcoin doesn't help with that.

My apologies for the harsh language .. bad morning .... but that's not an excuse .... still my bad!

What can you do about it ? Nothing except shout impotently into the wind which doesnt change anything.

In the world the government has made it acceptable to do what it does and it has the backing of the majority. It will pick liberty loving people off one by one and failing that brainwash their kids into subservience.

If you stray outside the restricted rules you are a terrorist.....

I think you wrote the quote incorrectly....

That's not how auditing works.

If you were to be audited by the IRS, they generally start at a very transparent transaction (like the purchase of a house), then work backwards to determine the source of funds. The onus, of course, is on you to lead them down the trail, and the general case is that your paid taxes don't add up to expended funds, so they extrapolate your purchase history as unreported earnings. Then you're retroactively responsible for those taxes + punitive fees and possible litigation.

It's no different than if you launder money. No matter how complicated and untraceable your laundering practice is, investigation starts at wherever your money rears its head in a transaction and you're going to have to explain it. The government doesn't just "give up" if it's too complicated: They just place the burden on you to uncomplicate it, else they attribute the disparity to negligence (at the very least).

I'm not a lawyer and this is only my observation.