Topic: FINCEN v IRS (Read 1281 times)

Shouldn't it give IRS too much power to control bitcoin? more over - shouldn't this break one of the main principe of bitcoin's world - bitcoin is decentralized and in case there would be an agency who would tell the price that would make us being influenced from that agency!

It is also a sure sign of totalitarian tendencies of the political system manifesting themselves in the justice system since it criminalises legitimate civilian protest (the withdrawing financial support). Peaceful liberal democracies treat tax matters in civil courts not criminal courts.

This is a punishment and actually it does work well as most people are scared to get arrested and go to jail! So it's less expensive to keep some people in jail while other are trying to avoid it and so pay the bill as expected

The issue is one of administrative law, and I'm not sure how to reconcile the different treatment by two executive branch agencies. Both the IRS and FinCEN's definitions were promulgated in the form of a guidance document, which has no binding legal effect. Guidance documents are neither rules (which would require the agencies to comport with the rule-making requirements enumerated in the Administrative Procedures Act, 5 U.S.C. §§ 551-559), nor are they adjudications the substance of which can be appealed and reviewed by federal courts.

I see two ways forward, one short term and one long term:

Short term way forward: The IRS guidance document requests "comments from the public regarding other types or aspects of virtual currency transactions that should be addressed in future guidance." You can mail your comments to:

Internal Revenue Service
Attn: CC:PA:LPD:PR (Notice 2014-21)
Room 5203
P.O. Box 7604
Ben Franklin Station
Washington, D.C. 20044

I think taxing virtual currencies as property ignores the fact that they are indeed designed to be used as a medium of exchange. The IRS's definition treatment as property (and taxing according to capital gains) means they perceive BTC as something that is purchased to appreciate in value. This perception is probably driven in part by how much BTC can fluctuate relative to fiat and the fact that some people are purchasing and selling for purely speculative purposes: the IRS wants to tax realized gains as income. The most significant problem with this guidance is that it discourages the use of BTC as a medium of exchange by imposing a substantial record keeping burden. It would be helpful if future guidance distinguished between the manner in which BTC was used, and in particular differentiate using BTC to buy and sell goods and services (BTC as a medium of exchange) from purchasing and selling BTC for the purpose of making money from speculation (BTC as a traded commodity).

Long term way forward: Petition various agencies to initiate the rule-making process for actual rules regarding the treatment of virtual currencies (http://www.reginfo.gov/public/reginfo/Regmap/regmap.pdf). The most obvious candidates are the Department of Treasury, the IRS and/or FinCEN, but it would probably not be effective to simply ask these agencies for a rule. Rather, before petitioning for rule-making to be initiated, some groundwork is required: (1) what person or association of persons will petition for the rule; (2) clear statement of purpose of the proposed rule-making; (3) clear language of the proposed rule; (4) clear explanation of why the proposed rule would be in the public interest; (5) relevant information assembled in easily digestible form; and (6) a clear and compelling explanation of why the rule is necessary.

A decentralized way to move forward would be to announce that we need this information, and call upon the BTC community to start submitting it to a designated repository. A committee of curators of that repository could cull the best and most relevant information and assemble a draft proposal of the petition for rule-making. The proposal would be announced for additional comment period before the community approves the petition in its final form. The committee of curators would then submit the petition to the agency or agencies.

Thoughts?

You are a useless slave if you are not paying your taxes to pay the Rothshilds, that is why.  They do not want useless slaves.

"where" is a fluid state in bitcoin

Its based on where you bought it how much you paid then how much you made from selling it.  It doesn't matter what the price is else where just what you sold it for.

I believe it would be more powerful to petition the IRS to include EVERY form of virtual currency as property and to be taxable like in massive online gaming, in game purchase you can exchange with others, on game consoles, etc, etc.

If World of Warcraft can "mine" objects its players can exchange for money then we should push for a case to make them property owners. US WoW players should be taxed if they make money by selling their property for cash, no matter how small the exchange is. The company should get an audit.

People hoarding expensive URL should pay property taxes too even though they never had the intention of selling. Someone with a very rare twitter @ knows how valuable it could be and so is the IRS.

let's not forget why MT Gox was created for and what platform it was serving.

Of course we need the IRS to tell us what is the official price of a bitcoin at any time in the world so to based our calculation on. Btc-e? Coinbase? MT GoX? Local bitcoin? Should it be based on the exchange the of that transaction even if that change is closed down?

I never understood how putting someone in jail for not paying taxes made any sense.

Isn't it more expensive to jail someone then it is to not jail them. Your losing move money by jailing them.

Funny I thought about this contradiction a few hours ago.

...If the IRS calls BTC property, but FINCEN requires licensing for transmission, can both be held legally

I think maybe they can as courts love legal fictions, and may find that IRS & FINCEN has the power to make certain attribution of properties to BTC for the purposes of thier function under various acts.

Still it seem the two definitions are somewhat at logger heads with each other. It would be some serious grounds to raise in court a ruling that says BTC is property so I don't need a FINCEN license as I was disposing of it as property and taxed accordingly. OR turn around to the IRS and say I was using it as currency or similar under the FINCEN money transmitting rules so at that time, it was not used as property.

Any comments?

There may quite a bit of intergovernmental fighting about BTC and CC's as each dept wants to get its advantage, eg tax/control it somehow, but this will be at the expense of other agencies. In fact this maybe something that causes BTC to overtake regulation attempt or stem govt intervention as they will end up fighting themselves for years internally.

On of the aspect of BTC is that its a little like looking at a 4d object from 3d space, it looks fundamentally different from where you stand.