Since we are necroing threads after consulting with legal counsel I am sure that Bitcoin can not meet any definition of "stored value". Stored Value requires an issuer/redeemer. When you buy a starbucks giftcard starbucks gains the cash (asset) and the obligation to pay (liability). The regulatory oversight with stored value comes from the potential for an issuer to spend/lose/steal the asset and thus be unable to pay the liability.
None of that exists with Bitcoin. No Bitcoin is the liability of any other entity. A MtGox code however is clearly stored value. If someone were to make a redeemable bitcoin gift card it would be stored value. I believe however a bitcoin card which contains the private key on the card wouldn't.
Topic: Giftcard analogy (Read 2051 times)
Bitcoins have no implied value, so they aren't subject to this type of regulation to begin with. They aren't gift cards.
No calling card minutes have implied value?They fall under FinCen definition of "stored value" the lack of legal precedent doesn't meet Bitcoin won't meet the same definition it just means it hasn't happened yet.
Nonsense.
What value is stored? How is it denominated? Who is storing it? How is it redeemed?
Who wants it?
Often, they can only be used in one kind of stores...
Whats worse, they often have a limited time span. So if you dont use them in two years they are worthless.
I don´t understand how that kind of fraud can be legal...Atleast in the country I live.
But still I think Bitcoin can be presented as a much better kind of giftcard, that can go up in value over time and do not have an end date.
Whats worse, they often have a limited time span. So if you dont use them in two years they are worthless.
I don´t understand how that kind of fraud can be legal...Atleast in the country I live.
But still I think Bitcoin can be presented as a much better kind of giftcard, that can go up in value over time and do not have an end date.
Bitcoins have no implied value, so they aren't subject to this type of regulation to begin with. They aren't gift cards.
No calling card minutes have implied value?They fall under FinCen definition of "stored value" the lack of legal precedent doesn't meet Bitcoin won't meet the same definition it just means it hasn't happened yet.
Nonsense.
What value is stored? How is it denominated? Who is storing it? How is it redeemed?
Bitcoins have no implied value, so they aren't subject to this type of regulation to begin with. They aren't gift cards.
No calling card minutes have implied value?They fall under FinCen definition of "stored value" the lack of legal precedent doesn't meet Bitcoin won't meet the same definition it just means it hasn't happened yet.
Bitcoins have no implied value, so they aren't subject to this type of regulation to begin with. They aren't gift cards.
All of this points out the idiocy of sales taxes. Sales taxes are an anachronism from times when records on income were non existent and thus collecting taxes when someone spends money made sense.
Today with intra-state, and intra-national retail sales, online shopping, and global shipping the sales tax collection method is horribly complex, expensive, and error prone.
sales tax + income tax + payroll taxes + other taxes vs income tax.
How much tax (if any) is an entirely different argument but it is just beyond stupid to have 3 different massively complex tax systems.
10% + 25% +15% + 5% vs 55%. Just collect it once and be done with it. The only reason why govt don't is because it would provide transparency. A single tax model (only income or only sales) would be ~50% in the US. Asinine. The govt thinks they are doing a good job of hiding the true cost of govt by putting it into multiple buckets.
Today with intra-state, and intra-national retail sales, online shopping, and global shipping the sales tax collection method is horribly complex, expensive, and error prone.
sales tax + income tax + payroll taxes + other taxes vs income tax.
How much tax (if any) is an entirely different argument but it is just beyond stupid to have 3 different massively complex tax systems.
10% + 25% +15% + 5% vs 55%. Just collect it once and be done with it. The only reason why govt don't is because it would provide transparency. A single tax model (only income or only sales) would be ~50% in the US. Asinine. The govt thinks they are doing a good job of hiding the true cost of govt by putting it into multiple buckets.
Digital currencies like bitcoin are, for a very near analogy to a gift card or a group on voucher. You buy your proof of value and then later you use it in a store that accepts it.
I think the key words are "closed loop" and "open loop".
The Forbes article describes how if there is a $50 Groupon offer to buy something normally sold at $100, the store must charge sales tax (in most states) on the $100, and then apply the $50 as payment towards that balance. We all know that is bunk because the only reason we bought it is because the was much less than the $100, so really only $50 of commerce happened.
If I understand the article correctly, the desire is to get rid of that and treat the $50 sale as a $50 sale. But then the states want the time of the sale to occur immediately, when the $50 payment to Groupon happens, and not later at the purchase at the store.
Bitcoin is not a closed loop. It is accepted globally for any number of uses. There is no way the state knows that the bitcoins are going to be used for a taxable purchase or used for a purchase within that state even.
What this myriad of rules means though is that just to comply a company like Groupon has to have a team of tax specialists. Here's a listing:
Quote
Key responsibilities will include coding for tax engine to ensure tax accuracy. Researching the taxability of goods, services, and vouchers sold by Groupon. Working with outside sales tax compliance firm relative to coordinating domestic sales tax compliance. Review and file monthly sales tax returns, create and maintain sales and use tax files for purposes of audit, and lead sales tax audit defense efforts. Creation and maintenance of a process for the review of procurement activity to ensure the proper payment of tax.
- http://www.linkedin.com/jobs/jobs-Sales--Use-2867622
Some day a marketing company is going to figure out that Bitcoin has properties that solve a lot of problems.
For instance, this groupon thing. Maybe there is a groupon competitor to come along that doesn't charge the customer, and instead simply charges a deposit (paid in bitcions) to reserve the deal from the retailer. If the customer follows through with the purchase as agreed, the bitcoin deposit is returned. If not, the fee is allocated partially to the groupon competitor and the balance to the retailer. No sales tax mess.
In the mean time these companies just can't seem to think out of the VIsa/MC/Amex and PayPal box. When will the first bitcoin-powered category killer arrive, I have no idea -- but there certainly is the potential for something like this to happen.
I just stumbled over this article:
http://www.forbes.com/sites/janetnovack/2012/03/26/24-states-moving-towards-decision-on-taxing-groupon-livingsocial-deals/
The discussion is, as I see it, also relevant for for bitcoins. Digital currencies like bitcoin are, for a very near analogy to a gift card or a group on voucher. You buy your proof of value and then later you use it in a store that accepts it. The decision by New York and other states to charge tax on the value and not the gift card value is actually accepting a gift card as a for of currency or a proof of depth. I expect bitcoins to be treated similarly resulting in nor sales tax on bitcoins.
We have had a similar discussion in the Nordic/EU forum, but I think the article from forbes indicates that it is a relevant discussion for US too.
Cheers,
Michael
http://www.forbes.com/sites/janetnovack/2012/03/26/24-states-moving-towards-decision-on-taxing-groupon-livingsocial-deals/
The discussion is, as I see it, also relevant for for bitcoins. Digital currencies like bitcoin are, for a very near analogy to a gift card or a group on voucher. You buy your proof of value and then later you use it in a store that accepts it. The decision by New York and other states to charge tax on the value and not the gift card value is actually accepting a gift card as a for of currency or a proof of depth. I expect bitcoins to be treated similarly resulting in nor sales tax on bitcoins.
We have had a similar discussion in the Nordic/EU forum, but I think the article from forbes indicates that it is a relevant discussion for US too.
Cheers,
Michael
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