Does the Bitcoin Foundation seek the taxability of bitcoins?

bg002h

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Quote from: benjamindees on October 07, 2012, 08:24:42 AM

I'm just going to say this a few more times on these forums, because I'm sick of repeating myself. And, frankly, I'm beginning to think that most of you are completely incapable of complex systems analysis.

If you pay taxes on Bitcoin transactions, you will relegate Bitcoin to the dustbin of history.

It has nothing to do with what you think is legal or illegal, or whether you enjoy paying taxes or not. It's a simple, mathematical fact.

Let's suppose for a moment you are a US citizen and you made a non-trivial sum of money in Bitcoin. Did/would you report it as income to the IRS? They're not exactly nice about tax evasion...

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Quote from: crazy_rabbit on October 07, 2012, 07:47:59 AM

Quote from: bg002h on October 06, 2012, 10:28:43 PM

Regardless of how you earn money, you pay taxes on it. If you get paid in chickens, you pay taxes...

+1

It will only take a tax office a rather short amount of time to come up with a way to tax you. People seem to think that Bitcoin means we can get away without paying taxes, only because it seems to circumvent the traceability of money. In reality the government has unlimited power and creativity with which to tax. They would just come up with something else to get their revenue.

Might be as simple as taxing your connection to the internet, through which you run bitcoin. Or the electronic device you run Bitcoin on.

Moving towards simpler consumption taxes and away from 4 gazillion pages of income tax regulations might one of the nicer side effects of widespread Bitcoin adoption.

benjamindees

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I'm just going to say this a few more times on these forums, because I'm sick of repeating myself. And, frankly, I'm beginning to think that most of you are completely incapable of complex systems analysis.

If you pay taxes on Bitcoin transactions, you will relegate Bitcoin to the dustbin of history.

It has nothing to do with what you think is legal or illegal, or whether you enjoy paying taxes or not. It's a simple, mathematical fact.

nobbynobbynoob

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Quote from: crazy_rabbit on October 07, 2012, 07:47:59 AM

Might be as simple as taxing your connection to the internet, through which you run bitcoin. Or the electronic device you run Bitcoin on.

Those are already taxed! (So essentially, you're right.)

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Quote from: bg002h on October 06, 2012, 10:28:43 PM

Regardless of how you earn money, you pay taxes on it. If you get paid in chickens, you pay taxes...

+1

It will only take a tax office a rather short amount of time to come up with a way to tax you. People seem to think that Bitcoin means we can get away without paying taxes, only because it seems to circumvent the traceability of money. In reality the government has unlimited power and creativity with which to tax. They would just come up with something else to get their revenue.

Might be as simple as taxing your connection to the internet, through which you run bitcoin. Or the electronic device you run Bitcoin on.

nobbynobbynoob

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Quote from: Come-from-Beyond on October 07, 2012, 06:25:47 AM

Imagine that everyone uses only Bitcoin, no conversion to fiat and back. Is it possible to catch tax evaders in such a situation?

It probably is but it wouldn't be easy.

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Imagine that everyone uses only Bitcoin, no conversion to fiat and back. Is it possible to catch tax evaders in such a situation?

repentance

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Quote from: nobbynobbynoob on October 07, 2012, 05:44:22 AM

If you cash out to a bank within your own territory then failing to report it might not be the best trick in the book. (Just my 0,02; IANAL &c.)

It would be a silly thing to do here because banks send information directly to the tax office - when I go to fill out my tax return, the amount of interest I earned during the year is already pre-filled.

Of course even honest business can run into problems if they're buying things for Bitcoins from people who don't want to issue receipts - being unable to claim those expenses might make it not worthwhile to use BTC.

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Quote from: repentance on October 07, 2012, 05:39:13 AM

Quote from: chmod755 on October 07, 2012, 05:36:17 AM

I'd say almost every Bitcoin-accepting business is already paying taxes on Bitcoin income, because companies are converting BTC to fiat - making it taxable income.

That doesn't mean they're reporting that income, of course.

Indeed, but most of them are probably keeping it legal. The B&B Luna Luna in Mechelen, Belg. (I'm not plugging them; have never stayed there) accepts bitcoins but issues receipts in eubles so almost certainly declare the (astronomical) VAT payments for the room, passing it onto the clients of course.

If you earn BTC income and don't "cash out" then it's pretty tough for the tax man to get at. If you cash out to a bank within your own territory then failing to report it might not be the best trick in the book. (Just my 0,02; IANAL &c.)

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Quote from: chmod755 on October 07, 2012, 05:36:17 AM

I'd say almost every Bitcoin-accepting business is already paying taxes on Bitcoin income, because companies are converting BTC to fiat - making it taxable income.

That doesn't mean they're reporting that income, of course.

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Quote from: Bitcoin Oz on October 07, 2012, 04:34:40 AM

Gavin could sneak in code that steals 10% of all bitcoin transactions to pay tax Cheesy

A built-in feature would be very difficult to implement. e.g. if I'm using Bitcoin behind TOR where should I pay my taxes and who verifies that I haven't specified a country with lower tax rates?

Quote from: repentance on October 06, 2012, 06:59:31 PM

And in many countries you'll be paying a goods and services tax (or some other kind sales/transaction) tax each time you buy or sell gold as well as tax on any increase in its value between purchase and sale. And even if the gold itself isn't subject to any taxes, if you make something out of it and sell that product a value added or sales tax of some kind is often applied.

The manner in which something is being used often determines its taxation liability. I don't pay tax on money per se, but I do pay tax on money I receive as income (although not on money I receive as gifts or windfalls). I pay tax on certain types of financial transactions. If I trade currency, then I'll have a taxation liability in respect of that trading. "Money" per se isn't taxable where I live, but many of its uses are - although those taxes are often invisible because they're included in the cost of goods and services.

I'd say almost every Bitcoin-accepting business is already paying taxes on Bitcoin income, because companies are converting BTC to fiat - making it taxable income.

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Quote from: BkkCoins on October 07, 2012, 04:26:38 AM

Maybe if Bitcoin becomes too popular they'll change the tax structure such that it's collected by the post office and couriers, by weight... and you'll need to pay to receive. Ugh!

It's a possibility. Customs duty can be collected in this way already.

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Quote from: nobbynobbynoob on October 06, 2012, 05:03:50 PM

In Southern Europe, ~~where income and sales tax levels are high or even astronomical~~, it isn't unusual for private individuals and merchants to do business in cash and then conveniently "forget" about the 20+% VAT due on that transaction. Surely the same could work with BTC payments, if the merchant so desires, even though this is "technically" (haha) illegal.

FTFY.

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Wat

Gavin could sneak in code that steals 10% of all bitcoin transactions to pay tax Cheesy

BkkCoins

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Quote from: jojo69 on October 07, 2012, 02:33:12 AM

Quote from: Etlase2 on October 06, 2012, 09:01:55 AM

Quote from: jojo69 on October 06, 2012, 08:16:33 AM

what, they going to search every piece of mail to make sure it is not part of a transaction? What kind of world are we building?

Are you under the impression that most commerce is done by mail? What does this have to do with sales tax?

I see online commerce as a primary market for bitcoin penetration so yes, almost all online commerce is direct shipping based. As there is no way for them to track the financial transaction the only way for them to demonstrate a taxable transaction occurred would be to search our freight.

Maybe if Bitcoin becomes too popular they'll change the tax structure such that it's collected by the post office and couriers, by weight... and you'll need to pay to receive. Ugh!

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Quote from: Etlase2 on October 06, 2012, 09:01:55 AM

Quote from: jojo69 on October 06, 2012, 08:16:33 AM

what, they going to search every piece of mail to make sure it is not part of a transaction? What kind of world are we building?

Are you under the impression that most commerce is done by mail? What does this have to do with sales tax?

I see online commerce as a primary market for bitcoin penetration so yes, almost all online commerce is direct shipping based. As there is no way for them to track the financial transaction the only way for them to demonstrate a taxable transaction occurred would be to search our freight.

johnyj

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I'm confused

Do you pay tax when you buy some EURO at forex exchange?

repentance

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Quote from: FreeMoney on October 06, 2012, 10:39:40 PM

Quote from: repentance on October 06, 2012, 06:59:31 PM

(about 60%, according to my daughter who used to work for the Taxation Office).

Wonder how they get that stat.

Government departments run on statistics. They know exactly how many people they've busted through data matching, tip-offs from the public, information on returns which flagged the system, routine audits, information provided by law enforcement or financial regulators, etc. They're also really, really aggressive about getting money owed to them so they investigate every tip-off.

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This question doesn't even make any sense as phrased. I'm not aware of any country that taxes money just for being money. Maybe there is somewhere - I don't know all tax regimes worldwide.

Most countries tax income of various sorts and it doesn't matter what form the income takes, though different classes of income are often taxed at differing rates. So taxability depends on your circumstances rather than what form of payment your incomes takes. For those intending to evade taxes what matters is how traceable bitcoin transactions are. So maybe this question should be re-phrased - Does the BF seek traceability and documentation of bitcoin transactions?

FreeMoney

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Quote from: repentance on October 06, 2012, 06:59:31 PM

(about 60%, according to my daughter who used to work for the Taxation Office).

Wonder how they get that stat.

Topic: Does the Bitcoin Foundation seek the taxability of bitcoins? (Read 4034 times)