Bitcoin Forum

I am looking into the future if I decide to sell some BTC, especially when a single bitcoin is worth many thousands or tens of thousands of US dollars. By the way, I live in USA and am dealing with USA bank accounts.

After reading the article below and others like it, it seems that certain size deposits and withdrawals into bank accounts can trigger a report to the IRS. I never knew this.

http://finance.zacks.com/federal-banking-rules-withdrawing-large-sums-cash-1696.html (http://finance.zacks.com/federal-banking-rules-withdrawing-large-sums-cash-1696.html)


Well, what if in the future, I wanted to sell $50,000 or $100,000 worth of bitcoin using Coinbase.com? They send it to your bank account. Would this create a problem?

Depositing this size dollar amount would be a new thing for me and I wouldn't want to screw it up.

What exactly does the bank/government do when this happens? When it's reported, then what? They would ask you what it's for, I imagine. I don't think saying "I sold some bitcoin" would be a smart answer, but it's the truth. I wouldn't want them to hold my money and risk them not giving it to me because it was bitcoin related. Could they do that?

I don't typically deal in that size of deposit/withdrawal so it would be very out of the ordinary for my accounts.

I realize I would have to pay tax on it (which sucks but that's how it goes in America), and I am not trying to evade any laws.

Can anyone with experience in this area help me out with advice and their experience with what happens?

I'm sure this information would help others with similar questions.

I don't think there is a way around this that would not open you to federal charges. You could attempt to move it slowly on local bit coins etc. but to sell that much quickly you would be liable for taxes which stinks, but it would be better than multiple felonies. 

I should add: I would NOT be trying to break the law in any way whatsoever.

The goal of my question is not on how to evade taxes or proper channels.

I just want to be able to do my deposit without it being stopped or getting me into trouble somehow.

Hi, honestly your better off keeping it cash because you will get taxed and even your bank account frozen cause your bank may try to pull a fast one  and start making accusations like 'how do we know this money wasnt made illegally' etc. you dont want the hassle buddy.

If you want to buy items and the only way to do it is via card or bank trf then you deposit the cash into your account and pay for it straight away.

A really illegal solution is to launder it and pay the minimal tax you can.

Dont worry in a few years time youll be making all your transactions out of your wallet and your kids will be asking you questions like 'What was it like having to deal with CASH and BANKS' like your a really old guy lol.

 

What do you mean by keeping it cash? It's already in BTC.

I am speculating and looking to recoup some of that into cash. It sounds like you're saying I can't sell my BTC for USD and deposit that into my bank account safely (in the amounts I am referring to).



For example, by using coinbase.com to make the sale of btc into usd

Just talk to your bank ahead of time before you send the deposit.  Make sure to ask them about their policy on any holds for large wire transfers.  Any deposit over $10k requires the bank to send a report to the IRS but that won't get you into trouble as long as you declare that money as income and pay taxes on it at the end of the year.

Honestly you're more likely to run into problems with the bitcoin exchange than you are with your bank.  I don't know if it's been sorted out now but I remember reading a few months ago about how Bitstamp was trying to make sells "prove" the source of their BTC before they would allow them to withdrawal USD.  IIRC they let them exchange the BTC into USD (and took their fee for doing so) and only notified them of the "prove your source" requirement after they had initiated the USD wire transfer.

Once you get the money out of the exchange I doubt you will run into many problems (check with your bank first anyway just in case.)  Once the bank recieves the wire transfer in your name they're legally obligated to give you that money (as long as its rightfully yours.)

Thanks Deebo.

I would be using coinbase.com unless there is a better alternative at the time. As per your advice, I will definitely ask my bank before I do it. I just wonder if they ask me what it's from and I tell them from selling digital currency/property, if that will make any difference? or raise additional flags? I don't want my bank account shut down or frozen or anything. Maybe this is not realistically going to happen, which would be good.

Does anyone have any experience with withdrawing large dollar amounts to their bank account with coinbase?

the question i would ask is why would you want $50k in one day..

in the future just sell what you need. $500 a week to pay the bills and feed yourself, maybe $20k to get a new car.. but cashing 100% out.. never.. think about retirement not a quick lottery win that you end up spending in a day

Your bank account is linked to coinbase, right?  You're not holding bitcoin elsewhere in an "offshore" account, right, so you're not using an actual wire transfer?  If you're just dealing with Coinbase then your bank will see where the funds came from and you should check with your bank what their policy is on bitcoin.  My bank was opposed to bitcoin and accepted the coinbase transfer one time only and I was warned not to do it again.

withdraw $9999 each time. and open multiple accounts

Why not just make multiple <$10k deposits from Coinbase? Avoiding the possible bank hassle of a single large deposit is a good enough reason for making multiple smaller deposits.

... and trigger a SAR for obvious attempt to mislead the regulators. Not a good plan.

You'll need to make a determination how friendly your bank is to bitcoin. If friendly, then just carry on - because you are not doing anything illegal nor immoral. If, however, your bank is, or may become, antagonistic toward bitcoin, then now is the time to start shopping around for a better bank.

Depsoiting is perfectly safe and seucre.

It's getting out  tons of fiat cash that gets sticky.

NOT a good idea and believe it or not, can be a crime in itself.

That'll trip the triggers faster'n you can say "Draw Pardner!"

I had thought of that myself but from the articles I've read that is a bad idea because it is trying to avoiding flags like jbreher and LostDutchman said. So I won't be doing that!



Well, it's specifically an investment and I want to pay off a large credit card debt. I have more btc that I will be holding much much longer (Many, many years). Don't worry I won't be selling my whole stash (not by a longshot)-- I'm not that stupid.

But if I sell, it will be from a wallet that I am using specifically for a shorter-term amount.

Well then I've already accomplished the difficult part ;)

Good advice. I will make sure before I do the transfer that it is ok. I have a couple of bank accounts with different banks, so I can find one that will work before I transfer the funds. All my accounts are in the USA, so nothing is offshore.

The CTR (currency transaction report) is for cash (as in those physical pieces of paper with dead presidents on them).  A bank wire or ACH for $10,000 (or $10,000,000) doesn't warrant a CTR.  However your bank may file a SAR (suspicious activity report) for just about financial transaction they find out of the ordinary (or even ordinary).  The "S" is SAR is suspicious.  It isn't proof of criminal activity or money laundering merely suspicion.  That definition is very loosely defined and since the filings are secret, banks have nothing to lose by filing liberally.

I haven't had any issues with coinbase xfers.  This is not cash from a banking secrecy standpoint as it is an electronic transfer.  BSA is looking specifically for 'cash' at the bank teller level when talking about the nice little form they give me attitude on :)

The real quesiton is what kind of reporting requirements does Coinbase have.  I'm not sure they have any right now, but I'm betting it will become like a 1099-k (Paypal) or 1099-B (brokerage) in the future so that the IRS knows what's going on.

Since the IRS has declared btc to be property, be sure to hold large amounts 1yr +1 day so you can get capital gains treatment.

This would be one of my concerns-- that the SAR would be applied because it is a bitcoin-related transaction. I would have to rule that out before doing the transfer. I guess asking the bank before I do it would be the best way.

Cool thanks for the advice.

Yeah, I definitely won't be bringing a wheelbarrow full of dollar bills into the bank :P

It will be coming electronically from coinbase.com

All financial institutions are prohibits by criminal and civil penalties from disclosing how to avoid a SAR, what transactions might constitute a SAR, or even if they have or have not filed a SAR against you or any other account holders.   The penalties are rather excessive so don't expect a bank to break this rule.  Financial institution in this case is any entity which is a mandated to file a SAR. That would include banks, brokerages, and MSBs (like bitcoin exchanges).

So basically they won't tell me if I ask (if my transfer from bitcoin->USD->bank account would trigger any flags), and I won't know until I try? Sounds un-fun and risky.

Honestly, they probably wouldn't tell you that they are going to send one.  You'll know about the CTR, but not necessarily the SAR.  I'm fairly sure I've had a few SARs already.  I usually have 1 CTR every month or so.  Sometimes its better to have them when you are dealing in a cash business than not ever showing any.  As an auditor, that's a bigger red flag to me.

That is the short version. Also "financial institution" covers more than just your bank.  PayPal is a financial institution so is any MSB (like a bitcoin exchange registered with FinCEN).  They all are under the same rules including the non-disclosure rules.   The odds are if you have done any large or unusual transactions probably more than one SAR has been filed regarding your activity already.  Welcome to the land of the free.

So I guess now the question is: Has anyone had a bank deposit coming from coinbase trigger a SAR report (Suspicious Activity Report) which resulted in difficulty/inability to get the funds?

Nobody would know.  They are prohibited from disclosing when a SAR is filed.  The SAR database is "secret".  You have no method of knowing if there is one or more SARs in your name right now.

probably :)

If you are on the up and up, you really won't notice either way.

I should clarify:

So I guess now the question is: Has anyone had a large bank deposit ($50k-$100k) coming from Coinbase trigger a SAR report (Suspicious Activity Report) which resulted in difficulty/inability to get the funds?

Yeah everything is honest here and I pay my taxes and such

Then no worries.  The worst I've had so far is my branch teller called and asked a few questions about bitcoin because their internal audit had questions (*cough*cough*).

I've also had over $200k in paypal hit the same account without issues.

Remember, if you're going to get rich, do it in the dark.

When they asked a few questions about bitcoin, what did you tell them? And what was their response?

Solid advice!  I figure 'they' have already got a nice file on me anyways since I'm a licensed professional, international wire transfers, mdse received direct from China, 1099s, K-1s, etc.

That it's a digital currency and the IRS and FINCEN have already issued statements on it so their audit folks need to brush up :)  They were fine with it then.

ok cool

This.

Under $10,000 no flags are raised. I don't think.

A SAR is just a report.  You make the transaction, and financial institution(s) files the report(s).  No financial institution has police powers.  They don't have the authority to seize suspected funds.  That is the job of law enforcement and it requires due process not suspicion.  If law enforcement is filing warrants to have your assets seized as part of a criminal investigation a SAR or CTR is the least of your worries.

Color me stunned. After all the factual info here in this thread about why this is a bad idea, you don't 'think' flags are raised? I don't believe you're thinking at all.

This is a special sort of activity for which the regulators are on alert. At least here in the land of the formerly free and the home of the cowed. They deem it important enough that they have their own pet term for it (structuring? - don't remember). But finagling your financial transactions in a way to purposely skirt the limits in place is also considered criminal, and earns you a special spot on their hit list.

Does this suck? In my mind yes. Is it fair? In my mind no. But this is the world in which we live.

If you want to play Amerikan roulette in this manner, then I guess that is your right. But please don't drag others to the gulag due to your ignorance.

Not entirely correct, as any withdrawal over about USD 9K can trigger a report, a single withdrawal of USD 9999.oo will trigger both a cash withdrawal as well as a SAR; suspicious activity report.

If you ask the bank if a withdrawal is going to be reported, the law mandates that it must be, even if it were expempt before you asked.

The federal government is very, very concerned about your cash.

Yep; they call it "structuring", in that withdrawals are structured and timed so as to avoid reporting by the banks.

It's a crime now here in the People's Republic.

The funny thing about this thread, to me, is that it's a worry about something that may not even be relevant if bitcoin reaches these values.  If we get to the point where bitcoins are worth 50K or more, it'll likely be so widely accepted that you won't need to convert it to USD, you'll just be able to spend it like you would dollars.

That will be true at some point but I am asking about 2-8 months in the future. I don't think a single BTC will be worth $50,000 in 2-8 months.

But yes, the future definitely holds easier lives for all of us bitcoiners.

What's wrong with saying "I sold some btc?" Just pay your taxes and you'll be fine.

You have nothing to worry about. Sell it however works best for you. You are selling something and that is OK to do. It doesn't matter if it's gold, silver, land, stocks, or bitcoins. Bitcoins are legal to own and legal to sell.  It doesn't matter if the bank files reports on the transaction because you are conducting legal activity. Any reports filed are done to comply with regulations, not because it is illegal to deposit large amounts of money in your account. No government agency is going to sieze your funds because it was a large transaction. The bank isn't going to ask you what the money was from.

Tax evasion is a crime. If you don't report it on your taxes when you file, the IRS may want to talk to you. Like the saying goes... "Only two things in life are certain, death and taxes."

I guess I wasn't sure how banks/government viewed the subject of bitcoin and how that might affect my banking experience. Thanks though, I think I have less to worry about than I thought.



Much appreciated post. That was exactly an answer to my question.

In a casino this is called structuring....same thing with banks.  Illegal.  Great way to not only throw flags, but get all your funds seized for good.

DO NOT DO

Yep!

What happens if you sell it before a year is up? What is the tax % then?

And what is it compared to if you hold it for over a year?




-edit- nevermind. I found a good answer to my question here:

http://www.investopedia.com/terms/c/capitalgainstreatment.asp (http://www.investopedia.com/terms/c/capitalgainstreatment.asp)