Biden's IRS Plans Could Boost Crypto Adoption

[jaysabi]

President Biden is seeking $80 billion in extra funding to bolster IRS and tax enforcement.  There is an estimated one trillion dollars in uncollected taxes, and the program will more than pay for itself, boosting tax receipts by more than $700 billion over ten years.  To be clear, this is not a tax increase, but the enforcement of tax laws that are already on the books and which tax payers regularly skirt.

BUT, the interesting part is this:  Under the plan, banks and other payment providers would be required to tell the IRS how much money came into and out of individuals' and businesses' bank accounts each year.  This new information would be useful to the IRS in determining who to audit when a business or individual has far more bank activity than their tax return and tax bill would suggest.  (Source: https://www.wsj.com/articles/biden-to-seek-80-billion-to-bolster-irs-tax-enforcement-11619539465)

Now, if you're a lowlife individual or business who is currently illegally underreporting your tax obligation, the new proposed bank reporting requirement is a threat to your illegal lifestyle.  Sure seems like an incentive to start transacting in crypto, doesn't it?

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[20kevin20]

Not really a good idea, unless privacy coins are used. Otherwise, blockchain analysis might get them into a lot of trouble.

At this point, I think it's better to stay offline and keep your illegal activity there as an underreporter or non-payer. Much better than moving to crypto. As far as I know, these guys keep their bank activity in the grey zone where txs are interpretable. Anyway, I have a quite strong feeling that the vast majority of those not paying are part of the upper class rather than the poor.

The upper class is way more experienced and has instant access to experts that could teach them how to avoid taxes while still staying in the legal area, while the poor pay taxes under the fear of messing up in case they try to move just a little bit away from the system.

[dothebeats]

BUT, the interesting part is this:  Under the plan, banks and other payment providers would be required to tell the IRS how much money came into and out of individuals' and businesses' bank accounts each year.  This new information would be useful to the IRS in determining who to audit when a business or individual has far more bank activity than their tax return and tax bill would suggest.  (Source: https://www.wsj.com/articles/biden-to-seek-80-billion-to-bolster-irs-tax-enforcement-11619539465)

Hmm, but does this not collide with bank secrecy law though? They are going to peep with bank accounts of entities in order to gain information. But yeah, perhaps there is a difference between personal and business accounts, and in order to survive this plan of Biden's, you need to get an insanely good accountant to cover up your tracks. You can also try and deal with cryptocurrencies if you want, and the privacy it offers is way better than banks at this point.

With this, businesses would be incentivized to use cryptocurrencies to save thousands on their businesses rather than give it to the government.

[hugeblack]

I see it from the other side, which is that the United States will appear more tax hawkish, which means that more restrictions will be imposed on the sale and purchase of cryptocurrencies, and thus more laws will be legislated to obtain more tax money.
The upside is that it will help the bitcoin price to grow as many companies will buy and not sell to avoid realizing capital gains.
The bad news is that many will avoid the alt currency market.

[jackg]

I see it from the other side, which is that the United States will appear more tax hawkish, which means that more restrictions will be imposed on the sale and purchase of cryptocurrencies, and thus more laws will be legislated to obtain more tax money.

They do already seem a bit like that though to most European countries where taxes are said to be a lot easier to file (I haven't filed in the US obviously but in the UK you put in your taxable income, taxable capital gains and they work out everything else for you).


I'm not sure how accurate it was but I saw reports the Donald has reduced tax investigations on wealthier people and left the ones on less wealthy people the same - but I think he also reduced tax to their lowest rates for everyone.

Is the cover for overseas bank accounts also ? Another way around this could be getting a bank account offshore that accepts usd or converting to eur/chf.

[Darker45]

At this point, I think it's better to stay offline and keep your illegal activity there as an underreporter or non-payer. Much better than moving to crypto. As far as I know, these guys keep their bank activity in the grey zone where txs are interpretable. Anyway, I have a quite strong feeling that the vast majority of those not paying are part of the upper class rather than the poor.

The new tax plan of the Biden administration is said to be precisely crafted in such a way as to target the wealthy. I haven't taken a look at it but that's what is being proposed, carefully taking note of the new president's campaign promise not to increase the taxes of those who are earning $400,000 and below.

I guess these high-earners will be looking for ways to get away from this oppressive tax policy if ever it comes into effect. This might include the exploitation of cryptocurrency's features.

[Gozie51]

Tax is one major way that the government generate money to finance her project and if people are running into cryptocurrency to evade payment of tax, I think the government should enact a law to include taxing in crypto to enable tracking of such money that would have come through taxing.
However , Biden trying to increase rate for rich and poor is to try and reduce inequality among the populace and that can reflect in investment capacity.

[slapper]

Buying cryptocurrency is under the laws and exchange is obligated to provide user data to the government, especially when they have any sort of transaction. Therefore, any activity is recorded and transferred to the authorities so as people can not avoid paying tax.

Money laundering can be a good way to buy cryptocurrency. Cash is also an option but as far as I know, involving suspicious activities only make thing worse. The only thing I know that whether they collect tax from the profit you made from the increase of bitcoin. If they do such a thing, it would be very ridiculous

IMO, those tax regulations can not decline the gap between the rich and the poor. They have to have more acts on those richest.

[electronicash]

there is no use in adopting cryptocurrency because IRS could all see the data when you cash your crypto to your bank when trading it for USD. IRS is the worse agency in US. they may even look at your crypto transactions in the past and whether you have some stash left.

you don't really have to hide from IRS but its just that it's up to 39% already that they meant to get from you. who wouldn't complain from it so you can't blame Elon to moving his production to Mars 

[Wexnident]

But wouldn't transactions like this, if ever transacted via crypto, would still in the end require them to use KYC (If they ever use centralized exchanges anyway)? That would still connect their accounts towards their bank accounts, still leading to the IRS discovering that they spent money towards crypto. Now whether where that crypto goes is none of their business, since their only job is to identify how much money from your bank went to that crypto business.

You'd start to stop using banks if you want to actually avoid the policy, and any money that you would transfer to exit banks should not come from banks themselves just to avoid it. Offline/Personal dealings might be the answer, that or someone above could help you manage it.

[Kittygalore]

It would further bolster their plans if they increase the taxes on big businesses and billionaires and reducing the military budget and investing in their healthcare to make it less expensive or much better is free. That means that if lowlife and tax evaders go into crypto, then it will further make it all the reason that bitcoin is used for criminal activities.

[LUCKMCFLY]

Particularly from the country that the person is, knowing the benefits that Bitcoin can bring and making transactions with the currency is the best that can happen, but when supporting tax reforms it is very difficult to trust what a government can give you as guarantees, although It is not the scenario, this makes me remember when there was the crisis of 2008 where they could not raise enough funds for the bonds, and there was the crash ... is it about a world crash announced?

In this case Biden highlights the immense problem that exists with FIAT money, in addition the FED with its constant notices in Pro of Bitcoin launching some intrinsic advice in the statements that Powell has made that says that Bitcoin could replace gold, all these things show that the emergence of a large debt besieges the country that handles the strongest currency.

[Poker Player]

Now, if you're a lowlife individual or business who is currently illegally underreporting your tax obligation, the new proposed bank reporting requirement is a threat to your illegal lifestyle.  Sure seems like an incentive to start transacting in crypto, doesn't it?

At the moment what there was on the day it was announced was a fall in the price of Bitcoin. You have to think that most people buy Bitcoin and cryptos on regulated exchanges. I don't know what effect that may have on small fraudsters, because in principle it is logical what you say, but it is difficult today to buy large amounts without KYC procedures.

[Haunebu]

there is no use in adopting cryptocurrency because IRS could all see the data when you cash your crypto to your bank when trading it for USD. IRS is the worse agency in US. they may even look at your crypto transactions in the past and whether you have some stash left.

There are ways to circumvent this to be honest. One of the best ways is OTC trading where big amounts can be traded anonymously. IRS cannot access your private transactions very easily since privacy is a big deal these days.

Op could be right here. There are many criminals around the world who actively trade cryptocurrencies in order to stay under the radar at present.

At the moment what there was on the day it was announced was a fall in the price of Bitcoin. You have to think that most people buy Bitcoin and cryptos on regulated exchanges. I don't know what effect that may have on small fraudsters, because in principle it is logical what you say, but it is difficult today to buy large amounts without KYC procedures.

Wrong. It is possible to buy big amounts of cryptocurrencies without KYC procedures through options like OTC trading etc. So many whales do this on a regular basis in order to stay anonymous.

[paxmao]

...
Now, if you're a lowlife individual or business who is currently illegally underreporting your tax obligation, the new proposed bank reporting requirement is a threat to your illegal lifestyle.  Sure seems like an incentive to start transacting in crypto, doesn't it?

I am not sure of the veracity of the information, even with a decent source, but anyway, I am just an average guy living in a western country. My earnings, bank movements, taxes and any economic activity that I dare to undertake is certainly registered, watched and taxed. Thus, I absolutely welcome any initiative that is going to apply the same rules to everyone and everything.

Crypto is not there to help with illegal transactions - even if there was some related adoption at first - the big bags are now wall street funds and large companies that usually have better means to avoid taxes. Thus my take is that crypto adoption will not be significantly changed by these measures.

[The Sceptical Chymist]

There are many criminals around the world who actively trade cryptocurrencies in order to stay under the radar at present.

Trading cryptocurrencies wouldn't be a great way to stay under the radar if you're looking to evade paying taxes.  I'd think you'd be more likely to lose money than anything else, given how volatile crypto is.

I've heard that most tax evasion is done by small business owners, which totally makes sense, since they aren't public companies and keep their own books.  It isn't primarily cryptocurrency users, though no doubt it happens. 

And the US government is going to need that projected $1 trillion dollars in uncollected taxes if they want to keep printing money and giving it away in the form of stimulus.  Jesus.  Have we entered Alice in Wonderland or what? 

[terrorJR]

well maybe because there was a strong push to the Biden government from the IRS Commissioner Chuck Rettig who at that time complained about the inadequate income of the budget that had been given by the US government. This effort was made so that the IRS could easily audit fraudulent practices and tax evasion, so the IRS request to employ 4,875 auditors for the purpose of updating the IRS information technology system was achieved.

[jrrsparkles]

Doing illegal works should never be encouraged by the cryptocurrency community no natter either they lead to more adoption or helping the market cap to rise. I am not sure what's is new in this bill when already every banks reporting all the user activities to IRS, so where they make changes to lesses the privacy of bank accounts in this new bill?

[oHnK]

There are many criminals around the world who actively trade cryptocurrencies in order to stay under the radar at present.

Trading cryptocurrencies wouldn't be a great way to stay under the radar if you're looking to evade paying taxes.  I'd think you'd be more likely to lose money than anything else, given how volatile crypto is.

Indeed, the large company cant hide their company's transactions as easy as they can. Even they protect it by using crypto. If Biden's really serious to collect taxes from every company, so He can use many policies to force the government's income. Banks and collaboration with another countries policy is one of the examples that can he do. Putting aside some of Biden's policies that's pretty weird in my opinion. This is a good policy, to force bad entrepreneurs for paying their obligation. The government have gave them many facilities but they can't give back to the government. This not only happens in the big scale country but also in another country such as my country.

[dkbit98]

And who exactly will give him this $80 billion then all the people who already pay taxes all the time, it's not coming from his own pockets, and his ''plan'' is to hire more people to work for government and IRS...

Now, if you're a lowlife individual or business who is currently illegally underreporting your tax obligation, the new proposed bank reporting requirement is a threat to your illegal lifestyle.  Sure seems like an incentive to start transacting in crypto, doesn't it?

Your topic is misleading and I don't understand how moving illegal transaction to Bitcoin public blockchain ledger would make any sense with crypto adoption...
except maybe making work easier for federal agents to catch you and track everything you did online, because they need to cash out at some point with this transactions.
Biden can't do anything good for Bitcoin from his basement with his new regulations, and honestly I think he is just reading the script and doing what someone else told him to do.