[2019-07-27] U.S. Tax Collector Is After Thousands of Bitcoin Holders

[Jgilpulg]

The IRS estimates that by the end of August 2019, more than 10,000 taxpayers will receive these letters.

https://bitcoinist.com/us-tax-collector-irs-is-sending-letters-to-thousands-of-bitcoin-holders/

[timerland]

Pretty expected. The more mainstream Bitcoin becomes, the more regulations the government will oppose on us. Back a year or 2 ago, you would never guess that these sort of things would happen, and a lot of people were able to easily avoid tax via crypto and a lot of OTC trades. I believe the IRS has been slowly growing their operations related to virtual currencies for 2 years now, and is not that much of a development, more of an omen for the things to come in following years.

It is also not surprising that Coinbase is coming under scrutiny. Their fairly small userbase of 14,000 US customers will likely expect this to be released, or they should have chosen other options (DEXs, P2P, OTC) to acquire their crypto.

Let's hope in the following years, leniency will be shown from the governments. Some time ago, people were forced to pay a 10 percent capital tax on BTC, and not a lot of people were pleased. These regulations are definitely not beneficial for mainstream adoption.

[figmentofmyass]

Pretty expected. The more mainstream Bitcoin becomes, the more regulations the government will oppose on us. Back a year or 2 ago, you would never guess that these sort of things would happen, and a lot of people were able to easily avoid tax via crypto and a lot of OTC trades. I believe the IRS has been slowly growing their operations related to virtual currencies for 2 years now, and is not that much of a development, more of an omen for the things to come in following years.

what i want to know is, where is their data coming from? is it all from the coinbase summons 2 years ago? are there exchanges that actually send 1099 forms to the IRS? is there blockchain analysis involved---does it go beyond those services where we've done KYC?

i remember there was a big scandal when these warning letters and audits starting hitting ebay sellers. people say paypal was sending 1099s to the IRS and not sending them to sellers. i think a lot of people got screwed over that way. in this case, i don't think there are any 1099s involved, so i'm wondering how (besides the coinbase summons) they targeted this group of taxpayers.

[BitHodler]

It will definitely impact those who still think crypto equals anonymity. I know enough people who think that crypto is one big criminal put where everyone is buying weapons and drugs because they can do it anonymously.

Even if crypto is really as anonymous as they think it is, nothing changes the fact that you are buying and selling coins through a centralized exchange. They will snitch on you to comply whenever they are asked to do so.

Crypto as a whole has grown past the stage where governments are not trying to collect taxes because they didn't deem it large enough. The profits people currently make are insane and so are the owed taxes.

IRS is like a bear smelling honey from many miles away.

[squatter]

It will definitely impact those who still think crypto equals anonymity. I know enough people who think that crypto is one big criminal put where everyone is buying weapons and drugs because they can do it anonymously.

Even if crypto is really as anonymous as they think it is, nothing changes the fact that you are buying and selling coins through a centralized exchange. They will snitch on you to comply whenever they are asked to do so.

That's the biggest question here -- is this just the IRS going after low-hanging fruit who used centralized exchanges with KYC and moved proceeds through their bank accounts? Or is there something more insidious happening?

The IRS will never say one way or the other, of course. They want people to think they know all and see all.

One thing to consider is the viability of their cases in court. The low-hanging fruit cases mentioned above would be easy to prosecute. But complex webs of transactions through non-KYC services where banks aren't touched? Maybe not. The super low $1,000 FATF threshold tells me they intend to pressure compliance through centralized services with KYC.

[1Referee]

It's just a glimpse of what we can expect globally. The US is usually setting the trend where other countries follow because they think there is plenty to gain now Bitcoin is worth more than ever before. I have paid all my due taxex because it's inevitable that tax agencies will eventually have insight on what traders/investors have been doing.

A lot people here have probably never paid a single penny in tax and don't know how to properly report their activities. The whole system is messed up where the tax mafia doesn't have mercy for those who make a mistake in their report. It's recommended to look for a professional and have that person review your report and make changes where needed. Better safe than sorry.

I'm glad that I paid all my due taxes because I don't want to look over my shoulder every moment. I just assume that my data got compromised and there is nothing that I can do but to be honest about my on-exchange activity.

[veleten]

would be great if this phantom letter by IRS is published
I'm pretty sure they have the Coinbase's database and would not be able to trace holders that are using non-KYC exchanges and services
also they are stating that purchasing ( and therefore holding ) bitcoin is not a taxable event, but :
"paying with the cryptocurrency to buy something else is a sale of Bitcoin, similar to the sale of a property. Therefore, it is a taxable event"
so they expect you to pay taxes every time you sell bitcoins , but how on Earth can they prove that your transaction was sales , bar having information from certain exchanges and services
therefore if you live in the US , get ready to pay your taxes on bitcoin transactions and have lovely time proving that the 0.8 btc transfer from your cold storage wasn't sales
or do not use government controlled exchanges and leave your personal data to any KYC compliant companies

[Vishnu.Reang]

The US is home to a few tens of millions of Bitcoin users. So the IRS has sent notices to less than 0.1% of all the Bitcoin users. Since the number is so small, I suspect that these guys (who received the notice) might have done something wrong (such as tax evasion). Now it is wrong to assume that the IRS is prosecuting all the crypto users in the US.

[rodel caling]

would be great if this phantom letter by IRS is published
I'm pretty sure they have the Coinbase's database and would not be able to trace holders that are using non-KYC exchanges and services
also they are stating that purchasing ( and therefore holding ) bitcoin is not a taxable event, but :
"paying with the cryptocurrency to buy something else is a sale of Bitcoin, similar to the sale of a property. Therefore, it is a taxable event"
so they expect you to pay taxes every time you sell bitcoins , but how on Earth can they prove that your transaction was sales , bar having information from certain exchanges and services
therefore if you live in the US , get ready to pay your taxes on bitcoin transactions and have lovely time proving that the 0.8 btc transfer from your cold storage wasn't sales
or do not use government controlled exchanges and leave your personal data to any KYC compliant companies

This is  great explanation, how to trace the real crypto holders to pay taxes, even if the exchange(coinbase) have an kyc requiremments to their users impossible to trace the real holders some holders are using fake indentification to submit as kyc requiremments, so it's is very difficult from the U.S irs to collect taxes came from the data of coinbase.