Can we really expect crypto taxation to run smoothly, even in developed nations?

[RGBTC]

Mod, please move this topic if isn't the right board.

Seriously, how could a tax officer with that level of competence possibly handle audits if the entire crypto-holding population say, 100 million people were involved?

Tax Office: "Who did you send this 1 million yen worth of USDC to?"
Me: "It's a transfer from 0x7A3F91B2C8D4E6F0123456789ABCDEF0 to 0xB82D47A1E903CF56123456789ABCDEF0."
Tax Office: "Who did you send it to?"
Me: "Me."
Tax Office: "Why did you send it to yourself?"
Me: "To change wallets."
Tax Office: "I get that. Why did you change it?"
Me: "Because I wanted to change the management location."
Tax Office: "Why did you want to change it?"
Me: "Just in case."
Tax Office: "Just in case what?"
Me: "To distribute the private key management and reduce security risks."
Tax Office: "That's not what I want to hear."
Me: "Then what do you want to hear?"
Tax Office: "Why did you send it to yourself?"
Me: "Because I wanted to move my money to another wallet of mine."
Tax Office: "Why is your answer different from before?"
Me: "I'm explaining the same thing at a different level of detail."
Tax Office: "Level of detail?"
Me: "Forget it. I'm tired."
Tax Office: "Why are you tired?"
Me: "Because the conversation is dragging on."
Tax Office: "Alright, let me ask simply. Where's the transaction history?"
Me: "It's on the blockchain."
Tax Office: "Where's the blockchain?"
Me: "All over the world."
Tax Office: "Where all over the world?"
Me: "Nodes."
Tax Office: "Where are the nodes?"
Me: "Everywhere."
Tax Office: "What do you mean everywhere?"
Me: "For example, with Bitcoin, there are tons of nodes all over the world holding the same ledger."
Tax Office: "So your 1 million yen is scattered all over the world too?"
Me: "No."
Tax Office: "Didn't you just say it's distributed?"
Me: "The ledger is what's distributed."
Tax Office: "And the ledger has the 1 million yen, right?"
Me: "It's not like the 1 million yen is sitting there."
Tax Office: "So where is the 1 million yen?"
Me: "Nowhere."
Tax Office: ""
Me: "To be precise, there's a record on the blockchain's state that my address holds that amount of USDC."
Tax Office: "What are you even saying?"
Me: "It's an explanation of blockchain technology."
Tax Office: "So who holds that 1 million yen?"
Me: "Me."
Tax Office: "Where do you hold it?"
Me: "In my wallet."
Tax Office: "Where's the wallet?"
Me: "The private key is with me."
Tax Office: "So the 1 million yen is in there?"
Me: "It's not."
Tax Office: "Didn't you just say it's in the wallet?"
Me: "That's how I'd explain it to a general audience."
Tax Office: "Am I a general audience?"
Me: "For now, yeah."
Tax Office: "Then tell me the recipient's address."
Me: "It's 0xB82D47A1E903CF56123456789ABCDEF0."
Tax Office: "I'm asking for the address."
Me: "Yes. 0xB82D47A1E903CF56123456789ABCDEF0."
Tax Office: "I mean the address."
Me: "That's what it is."
Tax Office: "Like Tokyo or Saitama— that kind of address."
Me: "That's my address."
Tax Office: "So the recipient's address."
Me: "So 0xB82D47A1E903CF56123456789ABCDEF0."
Tax Office: "Who lives there?"
Me: "No one."
Tax Office: "You sent 1 million yen to an address where no one lives?"
Me: "Yes."
Tax Office: "Why?"
Me: "I told you already, didn't I?"

I can see why someone might have reasons to avoid taxes, haha...
It’s not just about Bitcoin, but crypto as a whole. By the way, this is a tweet from a Japanese guy..

https://x.com/fishing_kiyogon/status/2097878117281038752

[_act_]

Seriously, how could a tax officer with that level of competence possibly handle audits if the entire crypto-holding population say, 100 million people were involved?

I can see why someone might have reasons to avoid taxes, haha...
It’s not just about Bitcoin, but crypto as a whole. By the way, this is a tweet from a Japanese guy..

Not even only about crypto, there are many people and in one way or the other, some people are able to evade tax. If you are reading news, you would have read how some people get punished for it and sent to jail for evading tax. So expect it also to be happening in crypto. Those with huge amount of money can first be targeted and known for evading tax. Those earning small amount of money may be hard to know because they are many than those those earning huge amount of money, and the governments know that they will gain money more per each person from those that earn high amount of money.

[Faisal2202]

haha this was funny if it was real, but It might be. I have encountered people in places where they have digital systems and they have never touched them for decades. Not knowing anything makes them a weak point. Now try teaching this to some of those. Wait, not some, but here all departments are full of them.

Gen Z has just started to replace a few, but on lower levels. Eventually they can help, but until then it is fun.

He (Japanese) should have said the money is in my head, I remembered everything haha. Taxpayer would be like:

[X-ray]

That was funny as hell. Wouldn't it be better for Tax officers to be handed access to AI, at the very least they could ask if they don't know.

The world is moving fast but tax officers aren't moving fast enough, some are always confused about anything new from my experience.

I would put the blame on the lack of training and refreshers and the higher up thinking one crypto course is enough training material for their officers.

If I recall correctly, several countries have started hiring for crypto asset tax specialist role.

[zasad@]

That was funny as hell. Wouldn't it be better for Tax officers to be handed access to AI, at the very least they could ask if they don't know.

You have likely never spoken to a tax inspector. They operate under strict guidelines, and if there is something they do not understand, they are required to clarify it with their supervisor. The cryptocurrency sector is evolving rapidly - outpacing the laws governing it - yet there are several ways to reduce one's tax liability. Individuals may attempt to understate their income through various schemes or conceal it altogether, but tax authorities are highly adept at dealing with such tactics.

[MarryWithBTC]

Hmmmm...

I can't believe that I read this hilarious and annoying conversation to the end.

This is just an example of "I want to test your patient level". Honestly, if it were me, I would either stop responding or I'll start responding like the tax officer.

Officer: Where is the address?
Me: 0xmHTFaK986HGAR...
Officer: I mean the address
Me: That's what it is...
Officer: Like Tokyo or Miami
Me: Okay, the location is the blockchain.
Officer: Where's the blockchain
Me: All over the world
Officer: So you live all over the world
Me: Yes, just like the blockchain...