I didn't pay capital gains tax on bitcoin sales to IRS today

[dscotese]

is it really smart poking the buffalo with a stick?
i hope you are at least posting this behind TOR and if not that the tax man won't subpoena the forum to disclose your ip to make an example.

They would still have to prove that I owe them something.

The burden is on the taxpayer (you) to prove that your tax return is accurate.

if the IRS feels like your standard of living is significantly above your income/assets then they will audit you and they have great investigative ability.

It is why you don't want to be audited and you want to keep as much documents and proofs possible in case you are audited

This is all assuming you exercise federal privilege of some kind in order to earn money.  It's called an "excise" tax for a good reason.

[makiyo_love]

According to Charlie Shrem, several govt agencies are monitoring here.

[Harley997]

is it really smart poking the buffalo with a stick?
i hope you are at least posting this behind TOR and if not that the tax man won't subpoena the forum to disclose your ip to make an example.

They would still have to prove that I owe them something.

The burden is on the taxpayer (you) to prove that your tax return is accurate.

if the IRS feels like your standard of living is significantly above your income/assets then they will audit you and they have great investigative ability.

It is why you don't want to be audited and you want to keep as much documents and proofs possible in case you are audited

But the OP is saying that he is not paying taxes on his gains on bitcoin.

[boumalo]

According to Charlie Shrem, several govt agencies are monitoring here.

Of course they are what do you expect?

They are monitoring automatically and with agents; you can consider it is their job, it depends how they monitor and what is the purpose

[dscotese]

According to Charlie Shrem, several govt agencies are monitoring here.

Of course they are what do you expect?

They are monitoring automatically and with agents; you can consider it is their job, it depends how they monitor and what is the purpose

Dear federal agents,

Go check out Pete Hendrickson's book.  I know your fellow bureaucrats have said it's full of lies, but have they identified any of those lies?  They pretended to.  The book says that "wages" is a legal term that does NOT describe what most people get for their work, and therefore the tax on "wages" does not apply to what most people get for their work.  Your fellow bureaucrats pretended this was a lie by altering it to: "Wages are not taxable."

Now, take a few minutes to figure out why they would alter what the book says in order to reverse its meaning and then call it a lie.  If it interests you enough, then go read the rest of the book for yourself so you can uncover all the other lies your fellow bureaucrats have invented to try to maintain the gravy train you're all riding.

And watch out, because the conclusion kind of sucks for you:  As a federal agent, you are in the small group of people who actually do owe the tax, because what you get for working DOES fit the legal definition of "wages".  But you can always quit!

[Harley997]

If you sold BTC today then you would not own capital gains taxes on these sales until "tax time" next year.

It is highly advisably to not openly break the law. The IRS is a very powerful agency.

It is difficult to avoid breaking the law if you don't know the law.  Most people who understand the law (Title 26, that is) well enough to avoid breaking it also avoid engaging in taxable activities so that they don't owe any income tax and can get back everything that was withheld from their paychecks (if any).  Most people who know the law that well have done some research.  Many of them found Peter E. Hendrickson's site and have been able to find their way through the bullshit, which is deep and thick because, as you point out, "The IRS is a very powerful agency."

Ignorance of the law is not an excuse to breaking it. 

[LostDutchman]

You don't have to break the law to pay little or no tax.

Would you like to know more?

[silverfuture]

is it really smart poking the buffalo with a stick?
i hope you are at least posting this behind TOR and if not that the tax man won't subpoena the forum to disclose your ip to make an example.

They would still have to prove that I owe them something.

The burden is on the taxpayer (you) to prove that your tax return is accurate.

if the IRS feels like your standard of living is significantly above your income/assets then they will audit you and they have great investigative ability.

I wonder if they accept the "computer crashed and lost all documents" argument from their victims?

http://freebeacon.com/issues/irs-lost-lerner-emails-due-to-computer-crash-agency-says/

[Harley997]

is it really smart poking the buffalo with a stick?
i hope you are at least posting this behind TOR and if not that the tax man won't subpoena the forum to disclose your ip to make an example.

They would still have to prove that I owe them something.

The burden is on the taxpayer (you) to prove that your tax return is accurate.

if the IRS feels like your standard of living is significantly above your income/assets then they will audit you and they have great investigative ability.

I wonder if they accept the "computer crashed and lost all documents" argument from their victims?

http://freebeacon.com/issues/irs-lost-lerner-emails-due-to-computer-crash-agency-says/

If you cannot produce documents then they can pretty much accuse you (and win) of pretty much everything.

LOL on the Louis Lenner link.

[boumalo]

is it really smart poking the buffalo with a stick?
i hope you are at least posting this behind TOR and if not that the tax man won't subpoena the forum to disclose your ip to make an example.

They would still have to prove that I owe them something.

The burden is on the taxpayer (you) to prove that your tax return is accurate.

if the IRS feels like your standard of living is significantly above your income/assets then they will audit you and they have great investigative ability.

I wonder if they accept the "computer crashed and lost all documents" argument from their victims?

http://freebeacon.com/issues/irs-lost-lerner-emails-due-to-computer-crash-agency-says/

If you cannot produce documents then they can pretty much accuse you (and win) of pretty much everything.

LOL on the Louis Lenner link.

The burden of proof is in the hands of the accuse; it is commun that tax payers end up having huge fines when they didn't cheat or broke the law

The fact that it was not intentional may be considered attenuating circumstance in some cases but it will not save you of paying some fines

[dscotese]

USC 26 6702(c) States:

(c) Listing of frivolous positions
    The Secretary shall prescribe (and periodically revise) a list of positions which the Secretary has identified as being frivolous for purposes of this subsection. The Secretary shall not include in such list any position that the Secretary determines meets the requirement of section 6662 (d)(2)(B)(ii)(II).

Here is the "list of positions which the Secretary has identified as being frivolous," but there is one position that is missing.  It's my position, and if they would like to add it to the list, then I will have to admit that I no longer have a legal basis for refusing to support their criminal operations.  Here is my position, which I think would go under section B ("The Meaning of Income:  Taxable Income and Gross Income"):

"Taxable Income" can only mean what a person gets by exercising some kind of federal privilege, so those who exercise no such privilege are not liable for the tax.

This was copied from my blog entry on the same subject.

[Harley997]

is it really smart poking the buffalo with a stick?
i hope you are at least posting this behind TOR and if not that the tax man won't subpoena the forum to disclose your ip to make an example.

They would still have to prove that I owe them something.

The burden is on the taxpayer (you) to prove that your tax return is accurate.

if the IRS feels like your standard of living is significantly above your income/assets then they will audit you and they have great investigative ability.

I wonder if they accept the "computer crashed and lost all documents" argument from their victims?

http://freebeacon.com/issues/irs-lost-lerner-emails-due-to-computer-crash-agency-says/

If you cannot produce documents then they can pretty much accuse you (and win) of pretty much everything.

LOL on the Louis Lenner link.

The burden of proof is in the hands of the accuse; it is commun that tax payers end up having huge fines when they didn't cheat or broke the law

The fact that it was not intentional may be considered attenuating circumstance in some cases but it will not save you of paying some fines

This is a very sad fact about our current set of tax laws.

[7Priest7]

The burden of proof is in the hands of the accuse; it is commun that tax payers end up having huge fines when they didn't cheat or broke the law

The fact that it was not intentional may be considered attenuating circumstance in some cases but it will not save you of paying some fines

In order for them to initiate a audit they must have some evidence that fraud occurred.

The "evidence" can come from MANY sources, but there must be a discrepancy in your taxes.
They will not simply audit random people who may or may not have bought/sold bitcoins. If you were intelligent enough to trade your bitcoins in a pseudo-anonymous format, they will never know.

That all said, if they have some evidence you have been dealing in bitcoins that you never reported, you will likely be audited, and you will have to prove that you have never traded bitcoins.

[boumalo]

The burden of proof is in the hands of the accuse; it is commun that tax payers end up having huge fines when they didn't cheat or broke the law

The fact that it was not intentional may be considered attenuating circumstance in some cases but it will not save you of paying some fines

In order for them to initiate a audit they must have some evidence that fraud occurred.

The "evidence" can come from MANY sources, but there must be a discrepancy in your taxes.
They will not simply audit random people who may or may not have bought/sold bitcoins. If you were intelligent enough to trade your bitcoins in a pseudo-anonymous format, they will never know.

That all said, if they have some evidence you have been dealing in bitcoins that you never reported, you will likely be audited, and you will have to prove that you have never traded bitcoins.

I didn't say they will randomly try to punish you but if friends/neighbourgs think you are avoiding taxes and you make money through Bitcoin you may gave you up and they may decide to audit you then you will need to prove your innocence or you may already be audited and they find Bitcoin transactions to your bank account ect.

Don't do anything illegal and keep records should be enough

[dscotese]

The burden of proof is in the hands of the accuse; it is commun that tax payers end up having huge fines when they didn't cheat or broke the law

The fact that it was not intentional may be considered attenuating circumstance in some cases but it will not save you of paying some fines

In order for them to initiate a audit they must have some evidence that fraud occurred.

The "evidence" can come from MANY sources, but there must be a discrepancy in your taxes.
They will not simply audit random people who may or may not have bought/sold bitcoins. If you were intelligent enough to trade your bitcoins in a pseudo-anonymous format, they will never know.

That all said, if they have some evidence you have been dealing in bitcoins that you never reported, you will likely be audited, and you will have to prove that you have never traded bitcoins.

This is not true.  If you avoid exercising any federal privilege in your bitcoin dealings, then you have no obligation to report them.  An analysis of Title 26 demonstrating this pretty clearly (and proving it with evidence from the IRS and Treasury) is available at losthorizons.com.

[Harley997]

The burden of proof is in the hands of the accuse; it is commun that tax payers end up having huge fines when they didn't cheat or broke the law

The fact that it was not intentional may be considered attenuating circumstance in some cases but it will not save you of paying some fines

In order for them to initiate a audit they must have some evidence that fraud occurred.

The "evidence" can come from MANY sources, but there must be a discrepancy in your taxes.
They will not simply audit random people who may or may not have bought/sold bitcoins. If you were intelligent enough to trade your bitcoins in a pseudo-anonymous format, they will never know.

That all said, if they have some evidence you have been dealing in bitcoins that you never reported, you will likely be audited, and you will have to prove that you have never traded bitcoins.

This is not true.  If you avoid exercising any federal privilege in your bitcoin dealings, then you have no obligation to report them.  An analysis of Title 26 demonstrating this pretty clearly (and proving it with evidence from the IRS and Treasury) is available at losthorizons.com.

That sounds a lot like the people who say that they do not have to file their taxes because there is no law that says a taxpayer must file their 1040.

[dscotese]

... If you avoid exercising any federal privilege in your bitcoin dealings, then you have no obligation to report them.  An analysis of Title 26 demonstrating this pretty clearly (and proving it with evidence from the IRS and Treasury) is available at losthorizons.com.

That sounds a lot like the people who say that they do not have to file their taxes because there is no law that says a taxpayer must file their 1040.

They are correct if there is no evidence that they received money from privileged activity, but W2s, 1099s, and the like ARE such evidence and the IRS has the people (incorrectly) producing them send those "information returns" directly to the IRS.  It is left up to the victim to set the record straight (with forms 4852, or corrected 1099s) or pay the alleged tax liabilities.  So it is like the position you wrote, but qualified and therefore legally valid, as the scans on the website of people receiving refunds shows.

By the way, I don't think the IRS ever points out that the presumptive legal evidence they receive in the form of W2s and 1099s is the basis of their (correct) position that the victims of their scam are actually legally obligated to file a return.  While it is immoral for them to require us to do that paperwork just because they've successfully tricked someone else into providing them with presumptive legal evidence, it is still the laws of the land.  It is far less damaging than actually forcing us to pay a tax we don't owe but, as in many cases, their brazen immorality in the first case is tolerated (actually supported by the justice system) because it isn't so onerous.  Then they leverage it into the far worse theft (when misapplied, as it generally is) that people call "income tax".

[cryptoanarchist]

The burden of proof is in the hands of the accuse; it is commun that tax payers end up having huge fines when they didn't cheat or broke the law

The fact that it was not intentional may be considered attenuating circumstance in some cases but it will not save you of paying some fines

In order for them to initiate a audit they must have some evidence that fraud occurred.

The "evidence" can come from MANY sources, but there must be a discrepancy in your taxes.
They will not simply audit random people who may or may not have bought/sold bitcoins. If you were intelligent enough to trade your bitcoins in a pseudo-anonymous format, they will never know.

That all said, if they have some evidence you have been dealing in bitcoins that you never reported, you will likely be audited, and you will have to prove that you have never traded bitcoins.

This is not true.  If you avoid exercising any federal privilege in your bitcoin dealings, then you have no obligation to report them.  An analysis of Title 26 demonstrating this pretty clearly (and proving it with evidence from the IRS and Treasury) is available at losthorizons.com.

That sounds a lot like the people who say that they do not have to file their taxes because there is no law that says a taxpayer must file their 1040.

who says that? I believe the argument is that they aren't "taxpayers" to begin with.

[Coin_Master]

OP needs to learn, holding bitcoin is tax rate of ZERO. but holding fiat in his personal account after selling the bitcoin. he needs to pay tax on that fiat gain.

but i do agree people are silly when it comes to saying "bitcoin is doomed" and here is why

1. people will find other ways to not need FIAT, thus not needing to claim FIAT gains
2. the IRS wont care about useless / worthless items. IRS have categorized bitcoin, thus it has proven bitcoin to be a valid store of wealth.

Hey Guys i thought i should clear this up once and for all. Tax liability has nothing to do with FIAT gains. Examples are numerous but one that will illustrate this well is the IRS position on taxing traded services where no FIAT is used.
http://www.irs.gov/taxtopics/tc420.html
"Bartering occurs when you exchange goods or services without exchanging money. An example of bartering is a plumber exchanging plumbing services for the dental services of a dentist. You must include in gross income in the year of receipt the fair market value of goods or services received from bartering."
Obviously this doesn't pertain to Bitcoin but people need to free their minds from the mistaken belief that FIAT must be involved to be a taxable event.

FIAT or not, there are still a number of issues, Bitcoin mining is a service provided by miners to the network for a "service fee" known as a reward. The Bitcoin nodes also charge a fee for their "service" and this is known as a "transaction fee".
These activities are covered in Publication 525, Taxable and Nontaxable Income under the section "information on miscellaneous income from exchanges involving property or services".
Bitcoin mining is specifically covered in this IRS document:
http://www.irs.gov/pub/irs-drop/n-14-21.pdf
Q-8: Does a taxpayer who "mines" virtual currency (for example, uses computer resources to validate Bitcoin transactions and maintain the public ledger) realize gross income upon receipt of the currency resulting from those activities?
A-8: Yes, when a taxpayer successfully "mines" virtual currency, the fair market value of the virtual currency as of the date of receipt is includible in gross income.

To complicate matters further the IRS state that any use of the "virtual currency" whatsoever would create a "taxable event".
Here is the most important revelation, the IRS require "any exchange" of "virtual currency" for other property (including other virtual currency, as it is considered property) to be considered for tax purposes. (eg. exchange of Bitcoin to Litecoin or other Altcoin)
Q-6: Does a taxpayer have gain or loss upon exchange of virtual currency for other property?
A-6: Yes. See Publication 544, Sales and Other Dispositions of Assets

So clearly FIAT is not a required component, to be liable for tax purposes, as the measurement used is "fair market value" not actual FIAT.
Although you are correct in the assertion that "holding bitcoin is tax rate of ZERO" you must consider that obtaining and disposing of Bitcoin are "taxable events" for tax purposes. In other words 'it is not possible for you to hold Bitcoin without "someone" first paying tax on that Bitcoin' or put another way 'you cannot mine, buy, sell, trade, swap or obtain Bitcoin (or any other virtual currency) without someone paying tax'.
Obtaining Bitcoin is a taxable event, holding it after this is irrelevant.

Hope this clears things up.

[Harley997]

The burden of proof is in the hands of the accuse; it is commun that tax payers end up having huge fines when they didn't cheat or broke the law

The fact that it was not intentional may be considered attenuating circumstance in some cases but it will not save you of paying some fines

In order for them to initiate a audit they must have some evidence that fraud occurred.

The "evidence" can come from MANY sources, but there must be a discrepancy in your taxes.
They will not simply audit random people who may or may not have bought/sold bitcoins. If you were intelligent enough to trade your bitcoins in a pseudo-anonymous format, they will never know.

That all said, if they have some evidence you have been dealing in bitcoins that you never reported, you will likely be audited, and you will have to prove that you have never traded bitcoins.

This is not true.  If you avoid exercising any federal privilege in your bitcoin dealings, then you have no obligation to report them.  An analysis of Title 26 demonstrating this pretty clearly (and proving it with evidence from the IRS and Treasury) is available at losthorizons.com.

That sounds a lot like the people who say that they do not have to file their taxes because there is no law that says a taxpayer must file their 1040.

who says that? I believe the argument is that they aren't "taxpayers" to begin with.

A lot of people (who don't pay/file taxes) make this argument. If you don't believe in paying taxes then how would food safety be paid for, or how would national defense be paid for?