Topic: [2018-02-10] The IRS Takes Its Tax Evasion Hunt to the Blockchain (Read 523 times)

I am curious on how they will be able to track and evaluate the capital. I mean the value of a coin can loose half of its value in very little time so how will you tax that in a fair way?

If these world become a movie, I'm sure that the main antagonist is the government. They really want people to be discouraged supporting crypto and forget it or have us pay so much tax if we still pursue it. They said that the government is here for us but we are like slaves for them to be honest.

Yes, I read about the poll tax introduced by Margaret "Iron Lady" Thatcher in 1980s in GB. It was highly unpopular there and said to have contributed greatly to her political death in early 1990s. On the other hand, which tax is popular anyway? With that said, we shouldn't forget that the majority of today's taxes are paid on your income, either directly via income tax itself or indirectly via VAT and similar taxes, which you pay when you buy stuff in your grocery store. If you don't have income and limit your consumption, you don't have to pay a lot of taxes. I'm not very fond of taxes myself, but modern tax systems are by far more flexible and progressive than what we had in the past.

It's not even about how easy it was to avoid, but how hard it was to collect. Back in the day people had no bank accounts and didn't keep the books. You couldn't prove that somebody has the money or not and the taxes were being gathered by the collectors. Many people didn't want to let them in, so they were letting themselves in. This lead to fights, quarrels and the whole process was taking too much time and resources. Read about the poll tax in GB. There are many sources available.
Yes, it was like a property tax, but  you didn't have to own anything to pay it. That looked like a bad thing, but it was much better than the taxes we are paying today.
Just imagine that you'd only have to pay once, just a property tax, wouldn't that be great? People don't know what they have until they lose it.

Many people reject the legitimacy of taxes

• It's involuntary, and hence legalised theft
• Violence (and threats of violence) are used to terrorise people to pay
• Because of the violence, a culture of waste and inefficiency pervades the government offices which spend the tax (why do a good job when the money is so easy to get?)
• Private organisations that receive government contracts also waste money (competition for contracts are often negotiated with corrupt terms and bidding processes)
• Government workers or contractors also simply spend the money on themselves and hide the evidence
• Most egregiously, governments start wars against other governments, drag their people into the wars, and kill millions in the conflicts

Maybe you weren't aware, but this is the reality of taxes.

I'm not in favour of paying someone money under violent threats towards me, then having them spend my money on mass-murder, stealing the property of the victims of mass-murder, spending my money on contract work for their friends, or just giving my money directly to themselves. And lying to me about all these things, that's the most egregious act of all.

Is anyone in favour of the above?

This was to be expected to start introducing taxes in the cryptomir. I think that no one is against taxes, the main thing is that they were not very large. If everything is regulated and brought to mind, then only large investors will come.

It probably was a hard burden due to the low income and the low general living standard back then.
However, I think he was comparing the percentage with the tax percentage that most countries have today
and then it becomes very clear that it was way lower than the tax percentage of today in most countries.

As I posted in another thread the general rise of the wealth of the nations of the world has allowed
countries to siphon off increasingly big amounts of money using taxation.

Are you sure that the poll tax was so easily avoided? I'm not very familiar with its history, but as far as I know almost everyone had to pay it even if they didn't have the money. In Great Britain, for example, it was levied on every person since age 14 as a percentage of the value of their property. So it was more like a property tax today. And if you mean that it was a light burden, then I can't quite agree with you.

you



I didn't



Your interpretation is too extreme. We don't need to regress to 19th century farming life in order to reject government totalitarianism, that's an enormous exaggeration. Just buy from independent businesses. Independent businesses make computers (although their supply chain may not necessarily be 100% free of proprietary components, the changes that can be made today are, e.g. no Windows and hence no licensing fee to Microsoft)

I´d speculate that this is partly related to the rise in the general wealth of most countries.
E.g. a few centuries ago the "poor" were starving and today the "poor" all have TV, Netflix
and a full fridge.

Due to this rise in the general wealth of most nations most countries can get away with
increasing the tax burden. After every rise of the GDP they can siphon off more money from
the taxpayers.

Who said it was my solution and why would you label me as part of them? I was born into this system and they pushed every belief they wanted me to conceive down my throat through the school system.

Also, your solution is too extreme for an everyday person. If we try to refuse the whole system, including the corporations we become something like the Amish.

Wasn't your computer built the corporations? We would not be taking without them.

That should be it, but what if as per the law you are forced to purchase healthcare insurance for example, and you don't want that? It's not that you can stretch it out for too long, because at some point it's a guarantee that the government will force you to pay what's due. If it isn't friendly, then it happens in a manner that is not so friendly. I have seen how this specific case has resulted in people being put into jail because they either can't pay it, or don't want to pay it. In other words, if you don't want to move to a country offering more freedom, you are basically being forced to compromise. What's your stance on this specific example?

Your solution is highly unoriginal: voting. It's never worked, as individual people can't simply elect the government they prefer. And at least 51% of the electorate reliably believe politicians who lie about what they'll do if elected. Your advice is no different than the same advice we've been receiving for 100's of years. It's never, ever worked.


I did offer a solution: refuse government everywhere and for everything. Refuse corporations everywhere and for everything. People are beginning to do both in increasing numbers, without me saying a thing.

I think the solution you are offering is long-term, and is quite impossible to adapt considering very well how politics work. It is only through taxation that governments earn and sustain its cause regardless of some of the politician's hidden agenda. Hence, to take away or minimize the power to tax is to remove from the governments one of its main functions to work efficiently. Remember in the US Constitution, the power to tax is an encompassing power of the government without which the latter is unable to function.

You mentioned about corruption. You know, this issue has been in existence since time immemorial. I suppose, too, all governments aim to push it down. Too much talk; less act -- that is what I see. How can they be proactive about something when they are the promoters of this act?

Thusly, pointing at Bitcoin is just one of those instances they are looking for loopholes in the government. We have to recognize that Bitcoin is not the problem, but the system of government that we have.   

This I agree with. It's not about taxes but about the people who run the government. Also, I reckon it would be better to have a smaller government than an ever larger, growing one that keeps increasing taxes every year. What they should be doing is make tax collection more efficient and consciously trying to push the corruption down to a minimum.

The problem I see is they increase the taxes because more and more of it goes to the corrupt's pockets hehehe.

@darkangel11. Is that who I am? No.

To hate people who criticize the government you first need to support the government. Is that who you are? A government supporter who doesn't criticize and hates those who do?
I would have a lot of ideas, but the problem with most people is they don't like changes. They are afraid that when they switch a couple bricks out or make a hole for a new window the whole building will fall on their heads. If you add the fact that old farts who grew in the system like to hold on to their chairs until they die or get kicked by force, you'll have a recipe for the never ending reign of socialism Yo read it right, because most of the world is still living in modern socialism. Taxes are meant to take from the rich (different tax rates depending on the income) and give to the poor (allowances, handouts) and the governments are trying to figure out how to implement new types of taxes. In some countries you're forced to pay a tax for owning a TV, called a TV licence... In the UK they're even invading homes trying to check if people own a TV.

One thing should be clear to all of at this point in  the cryptocurrency movement: We should not use cryptocurrency as a means to evade paying taxes otherwise IRS will do everything in its power to run after us. We have to give in to the government's demand to have a share of the money we earned regardless of the source digital or fiat. Despite not having the proper recognition from the government on cryptocurrency, once the digital asset is converted into US Dollar the government is staking a claim on that and they the law backing them up. Just like in any industry, there will always be that cat-and-mouse kind of play here.

A lot of us took to the streets to wave posters in their face. When someone is waving a poster saying, "Stop the expensive WAR, use the money to protect our borders" then we offered them solutions.

Most people only have a voice, when they are beaten on the streets for saying the truth.

They have a right to demand their taxes, but they have a duty to spend it wisely. We have a duty to remind them, when they are wasting those taxes.

These senseless wars in other countries is just one of the examples. People are duying of hunger in 1st world countries, because their governments are dropping $100 000 bombs in other countries.

I think it is a good move to always try to exert some level of control to your people, hence, the US government keep pushing through on regulating cryptos and for it to be taxed correlatively just like any other businesses or employment. To be honest, I see nothing wrong with it because it only shows they are doing their jobs. Set plausible corruption aside, I know taxing those who earn with cryptos is just right according to all laws of the land.

Although on the flip side, I am wondering how is this possible considering the heavily encrypted database? Also, the transactions contain no identities except for maybe making use of the location of the user, but we all know this cannot be accurate in any sense. It may only give you leads.

Well, as they say, there will always be ways to get a hand of this especially if there is money involved.

Yes, but what about I hate about some people who keep criticizing the government, not that I love it, is that they offer no solution, only complaints.

But if you ask them what they reckon should be done with it, they do not offer anything.

To would be revolutionaries. Before you express any discontent, know the solutions before breaking things down.

This is an incredibly loaded question, bbc.reporter

There's no mention of hate, simply statement of easily verifiable facts. These may be unpalatable facts to some, but it's entirely correct to say that police in pretty much every western "1st world" country behave oppressively towards members of the public that they should in fact be protecting from bullying behaviour. The problem may be more serious in the USA, but it's happening on a small scale everywhere.



Be the change, etc. With Bitcoin, we're already doing something very important, using a private system. Try to live your whole life without using government services, and encourage others to do the same. If no government will ever honestly decrease waste and corruption in public services if they are voted for, then we should vote instead with our money for services that are properly incentivised to serve it's users.



All states are police states to some degree, as they all rely on threats, theft and violence to ensure people pay for government services.

The magic is in how this has evolved; as recently as the middle ages, governments didn't even try to pretend that they weren't bullying people to steal from them, taxes were collected exclusively for maintaining the position and lifestyle of royalty and local lords. But as the education of regular people became more widespread, and possibilities in infrastructure and industry improved, government gradually changed itself from the previous system of obvious open theft into a more benevolently styled system. It's no coincidence that the power of the church simultaneously waned; all the best liars could earn a more attractive wage constructing lies for governments than they could as church ministers. The psychological control of the masses switched from church to state.

The truth is we never needed them. Most people treat each other well without the threat of state punishing them, they value their reputation (and simple reputation is a more effective policing system than ever in the internet-age). We're paying alot of money to the government for very little improvement in our own lives, when we could simply pay for what they do provide (far cheaper than the corrupt deals they make) directly.

And we can avoid paying them to start fights (i.e. wars) with other governments that threaten everyone's safety, and in the end only serve the needs of their friends who pick up all the contracts to rebuild the destroyed cities or to steal the natural resources from the previous owners exploiting them. Or you could just believe all that BBC reporting that says governments invade and bomb other countries to pieces because of what nice people they are.

You must be earning not that much and paying not that much tax. I know many americans who fairly consider they must NOT pay so much tax for actually poor services and feeding those who don't work and don't want to work.

Absolutely agree, your balls and brains can always save you from IRS. Do you really think they have a team of 10 professional blockchain experts? I don't think they own a necessary budget to keep PRO experts, while keeping some 10 suckers who will investigate schemes like purchasing 10 btc with ACH or credit card and then selling it back. Use mixers, cash, vpn, don't make gifts to them with any of your personal and banking details left in blockchain apps and services like exchanges and you will be safe.

Why is there such a concern with governments making sure that people pay their taxes? I can understand the issue in places where there is rampant corruption and leaders are building palaces or estates and spending money that should really be going to services. But in 1st world countries tax is needed, and if people arent paying their fair share that drags the whole system down. I like the roads I drive on, the school i went to, the hospital i can walk into without any additional cost. Do you want to drive on dirt tracks with uneducated people attempting to wash your windows at intersections that the lights dont work at correctly? I dont, so I pay my tax.

So what do you propose if you hate the government? What should we do to start governing ourselves better and how do we create a better system?

I reckon the problem with the government is not about collecting taxes. From what you mentioned, the problem is a country becoming a police state like what is happening in America now.

Correct. Even crypto trading South Korea has implement such schemes already. They are now sharing exchanges information to their local banks. Its one way that the government can track and hunt you down for not paying taxes.

As for the US, its been reported already that only few has filed taxes for their crypto earnings that's why they step up the plate and used blockchain and tools like blockchain analysis to look for those tax evaders. Just a matter of time that US citizens can be caught, penalized and fined heavy for their crypto wealth.

Is that how you see it? They need taxes to keep the peace? Where? Inside the country? So, they are collecting taxes to fund the police and the army that will beat us if we protest, put us in jail if we stop paying and kill us if we try to abolish the government. Is that the peacekeeping that you have in mind?
And knowing how it works you continue to support it? You're like a slave who every evening after coming from work whips himself and locks himself in his cage for the night.

That is the key phrase, is quite difficult but not impossible. The blockchain is also public in which regulators can follow all your transactions by using something like Chainalysis.

Also, mixing services cannot be trusted as some of them might be honeypots or compromised.

On the topic of taxes, they are beneficial. How do you think your country's government manages to stay afloat and keep the peace?

Once you have verified yourself I'm pretty sure there will always be some trace of your personal information, regardless if you ask them to 'delete' it. There will always be that one backup server that still has your private information on, and if the price starts ramping up again and the IRS starts smelling money things could potentially go down. They can (and probably) will force a lot of exchanges to hand over personal information and then they will start their witch hunt. Of course that would be the worst case scenario but that doesn't make it less probable.

Exactly, you are not the only one who have that "fear", but as you know this is only the beginning, with time all of them will require it, what made me doubt if this is good or not :S, anyway i hope that you didn't ask to exchanges like polo to do it, if yes, i'm pretty sure you are still waiting for a reply, like me, for more than 2 months at the moment...

Less bothered doesn't necessarily mean they agree with all the tax forms. I can't think of anyone being happy to pay a ridiculous amount of tax over their income or profits, that's just impossible. In that regard it's indeed more a matter of accepting their faith due to them not knowing any better. The point is that if there is one aspect of the government you don't want to mess with, then it's the tax department. It's not for nothing that in some cases tax fraud or tax evasion (which in my book means that you just want to protect your own capital and income) gets punished harder than rape and whatnot. It's basically like the mafia forcing brick and mortar stores to pay a certain form of "protection" tax, and when you refuse to pay, you'll find out what's going to happen with you and your business. This system is one rotten hole people can't escape from, unless they take the necessary actions, where Bitcoin is the perfect alternative to achieve the freedom this system will never give you.

Private companies are contracted to mostly do all that work, they could do all of it. The government essentially just takes (very high amounts of) middleman's fees from the contracts. It's completely corrupt, the government chooses their best buddies in the industry for the contracts (the infamous "no bid" contracts), and we get to pay the extra money they all gift themselves with.

If you manage to avoid centralized entities in this market entirely, which is quite difficult but not impossible, no one will be able to connect you with whatever addresses containing x number of coins.

Currently the majority of the people here in this market are so dependent on centralized entities, that they have already a profile of themselves (without them knowing) that at a later point can, and will be used against them.

On the other hand, if we look at the average joes, they are less bothered by tax rates, which is quite difficult to swallow for me. Are they just accepting their faith, or actually think taxation is a beneficial necessity.......

I know people talking about the importance of tax because that allows governments to improve infrastructure, etc.

Aren`t they supposed to tax profits on a period basis? I don`t see an exchange trade where they put the taxation same as VAT and you pay it immidiately. When they start jailing, taxing, whatever fud, contact me we will fix anything. That is the reason they have not done it until now. There are so many backdoors etc. Let them come they won`t get a penny if you have some balls.

darkangel11. No, but it is still not anonymous enough. The government regulators can follow a suspicious address and watch the funds move from address to address and wait for the user to make the slightest of mistakes.

Also remember, most bitcoin holders who bought during the mania are not that experienced. The IRS would surely come after them first and get what they are owed.

They also imprisoned Al Capone for tax evasion. No one can hide from the IRS hehehe.

It's an expected development in this market with more regulations being enforced by authorities. It won't take long before people who don't pay their due taxes to regret having fully verified themselves there. I have even considered once to ask if the exchanges I am verified at offer the possibility to delete my account with all my personal information. I can't seem to find anything in their TOS, so I have to email them for real in the coming days to ask what the options are. I am actually worried, because an exchange can easily be forced to hand over user information with all trading and deposit/withdrawal logs.

Oh yea, forcing the slaves to pay more for the "common good" while the politicians are rolling in it and cruising in their private jets is not such a bad thing. We need regulations, they will allow our masters to get our private wallets under control and surveillance and that's exactly what they need to keep us in line.


It's still anonymous as long as you avoid exchanges. I think that in time there will be anonymous and traceable bitcoins. Anonymous will be those coins that are being held on private addresses before the introduction of tax surveillance. If such coins are moved from one address to another (private one) nobody will know who paid who. Bad news for those who buy on an exchange as their coins will start to leave a trace.

It's still not an easy tax for a tax man. But they will do it for sure. They always do.
Regulating crypto is not a bad thing necessary, but I don't like to be regulated in greedy people favor.

Guess it was just a matter of when not if the taxman getting involve in crypto.
Anonymous crypto-currency.? Not so much.

As the adage goes, there are two certainties in life: death and taxes. For any U.S. bitcoiners considering wriggling out of the latter, that task just got a little harder. The country’s Internal Revenue Service has revealed that it’s bolstering its armory to make it easier to track down crypto tax evaders. It’s now assembled a crack team of blockchain forensic experts to help claim its pound of flesh.

The Taxman Tools Up

U.S. citizens have known for some time that the IRS has been shining its spotlight on the crypto space. The first flickers emerged over a year ago, after the tax body subpoenaed Coinbase for its user data in a case that wound up in the courts before the IRS ultimately prevailed, securing the details of over 15,000 exchange customers. That spotlight has gotten discernibly brighter now that the IRS has successfully enlisted heavyweights with the tools and skills to pry into blockchain activity.

In an interview, IRS chief Don Fort revealed how the Criminal Investigation Division, which he heads, has added 10 new investigators. “It’s possible to use Bitcoin and other cryptocurrencies in the same fashion as foreign bank accounts to facilitate tax evasion,” he said. Bloomberg reports how the Criminal Investigation Division has actually lost key staffers since 2011 on account of budget cuts. The recruitment of 10 new staffers will see the division returned to full strength, complete with its own crew of blockchain experts.

Forensic Tools for a Digital Age

The range of blockchain tools available to U.S. investigators is getting more numerous and sophisticated. Companies such as Bitfury have earned ire from the crypto community for their willingness to work hand in glove with law enforcement to scrutinize blockchain activity, clustering related addresses together and highlighting suspicious activity. The company’s advisor, Jason Weinstein, a former DOJ investigator, crowed: “Having a traceable public ledger of every bitcoin transaction ever conducted allows law enforcement to ‘follow the money’ in a way that would never be possible with cash.”

The IRS Takes Its Tax Evasion Hunt to the BlockchainMost countries expect their citizens to pay tax on cryptocurrency, so it is not atypical for an agency such as the IRS to take a proactive stance on bitcoin. U.S. agencies are famed for their unparalleled investigative powers, though, and tentacles that extend way beyond home turf. In fact, the IRS recently wrapped up a successful investigation into U.S. assets concealed in Swiss bank accounts. If it has reason to believe citizens within its jurisdiction are hiding their cryptocurrency in overseas exchanges, it will have no qualms about following suit.

When it comes to taxation, U.S. bitcoiners can roughly be split into three groups: those (begrudgingly) intending to pay, those hoping the IRS will spare them on account of having bigger fish to fry, and those willing to do whatever it takes not to pay, even if that means moving to Puerto Rico. While the IRS lacks the resources to pursue every U.S. citizen with a stake in cryptocurrency, the tide is evidently turning. The days of wide scale cryptocurrency tax avoidance are surely numbered.

source: https://news.bitcoin.com/irs-takes-tax-evasion-hunt-blockchain