Topic: IRS proposes unprecedented data-collection on crypto users (Read 281 times)

there's alot worse things on telegram than just people using bitcoin to avoid paying taxes. way worse things.  but yeah, it wouldn't suprise me that people use telegram to launder money through bitcoin somehow.

I have long wanted to ask you about shadow cryptocurrency exchange services in the USA?
Several Russian guys who live in the USA found similar services within a few days in telegram chats of expats. I haven’t talked to them since then, but I don’t think everyone in the US follows cryptocurrency laws.

I kept thinking about that too, and I don't know if it's a joke or something. No tax refund, no wages and no bank account? If he lived in Somalia it would make more sense to me but it sounds to me like he lives in the USA. If true, he must be living Satoshi's P2P dream at its best.

none of them? then you're about as judgement proof as they come. congrats!

Of course its true. There is no machine that can reason with someone as to why they should pay back tax debt and then end up convincing them to do so. The human touch will always be vital to such types of negotiations. Another thing you have to consider is whether or not they have the funds or assets to make any kind of payback, whatsoever. Can't squeeze blood from a stone.


I will just wait until that time comes.


I don't have any of those things.

Well, that's relative. There are a couple of sites that don't require KYC under 1000 CHF but if you're going to buy online it's going to be by card or bank transfer, so you leave a trail for the IRS. Your best bet would be to use a bridge account in a third country where the IRS does not have direct access and make purchases by bank transfer or card from there.

wait a minute so, a usa citizen can buy bitcoin online from switzerland and the irs can't know anything about that? i bet the irs doesn't like that, if that's the case. but better be careful. keep that ledger nano hidden so the irs agent doesn't notice it if they come knocking on your door for an audit.  

i thought the usa would surely try and make a military action to take over switzerland if switzerland refused to comply with a request to hand over information.

https://www.theblock.co/post/259757/kraken-irs-user-data-order
Kraken to share user data with IRS next month following June court order

if they can force kraken to spill the beans on people sending money through bitcoin then they can force anyone to. i would think.

USA (and European Union) administration can do many things but they can't change sovereign countries laws, no-KYC exchanges exist in regulatory havens like Switzerland. There, it's legal to let customers exchanging 1000CHF(~$1100) by day without requiring KYC. It's their law. So I think some KYCless solutions will last for longtime, at least for small amounts, somewhere in the world, fortunately.
https://www.mtpelerin.com/faq/how-to-buy-bitcoin-in-switzerland
https://web.archive.org/web/20230528085507/https://www.mtpelerin.com/faq/how-to-buy-bitcoin-in-switzerland

They seem to have some type of computer system that calculates peoples' taxes and sends out letters if they made any arithmetic mistakes or didn't file a form they were supposed to. And then they'll say if we dont hear back from you then we'll assume you agree with our new assessment. So then you have to call them or write them. Or just pay the bill. I don't know if it happens to crypto traders either.

I have to wonder if that's really true that human intervention really plays such a huge role. maybe it used to but it would seem like they are going to start using AI to cut out alot of these data analysis and auditors jobs. they won't be needed anymore. The only thing that will be needed is a police officer to come take you to jail if you ignore their lawsuit.

Imagine one day, AI does everything except rounding people up and throwing them in jail. it makes the decisions about who to audit and how much they owe and even files a lawsuit and presents its own case to a judge. How are you going to win a court case like that?

They might not come knocking at your door but the debt will incur interest and eventually they will either take it out of a tax refund you are due or if it gets big enough, they'll file a lawsuit against you and garnish your wages or sieze your bank account. 

The automated letter part I believe is possible, though I've never heard of it happening to crypto traders (who knows, it may happen). The audit portion requires actual human intervention. This means resources need to be dedicated and people have to be paid for their work... everyone from the data analyst to the auditor to the collector to the manager. Not to mention travel expenses. Additionally, collectors are often entitled to a cut of whatever they are able to retrieve.

The letter part is easy. The "going after you" part costs a lot of money.

So no, they won't go after you for a couple hundred bucks.

You can just keep printing it. Raising taxes is not the only option.

Regarding what nutildah says, nothing new. In general tax inspectors give preference to large amounts over small amounts, unless they get evidence by someone rerporting or something like that. In the case of other countries the threshold for not being so interesting for the tax authorities is obviously lower, as USA is (still) the country with the highest GDP in the world. But in general things like you earn $70 a week in a signature campaign which is about $3500 a year and you don't declare it doesn't make you interesting for the IRS or the equivalent in other countries, as to begin with they should find out from which country you connect to the forum, if you do it with a vpn, etc. The cost profit ratio doesn't pay off for them.

That said, I pay my taxes and recommend everyone to do so.

i don't know how you are getting around this rule then. about the $3000 per year.

https://cointelegraph.com/news/what-is-crypto-tax-loss-harvesting-and-how-does-it-work

Additionally, the IRS limits the amount of capital losses that can be offset against ordinary income to $3,000 per year.

it doesn't sound like it since you put the money into something else.


yeah, that and mining is just cool. 

that does sound reasonable but you do realize that just because they don't audit someone doesn't mean they can't generate a letter and put in the mail telling someone how much money they owe because they didn't pay enough taxes. The computer system figured it all out, so it doesn't take any manpower at all. So yes, they will go after you for a couple hundred bucks. Don't believe it?

Well last year I lost 59k in cap gains. long term .This year I have 9,000 in gains short term.

It is impossible to know you will have a short term gain. thus I did not tax  harvest the 9 k.

and the 59k is directly apliable to the 9k. which will leave me 50k for next year.

Tax harvesting applies more is all your shit is long term since you already know there is a gain you can take.

When I choose to take that 59k lose i zeroed out every coin I owned. paid debts and used to cash to allow me to continue to mine.
So I did not tax harvest.

Another advantage of mining over just buying coins.

yeah but isnt paying taxes on crypto outside of most peoples' expertise about how to keep records and calculate it? i know it is for me. so it must be for other people to. 


get ready for jail if you're doing that.

https://www.thebalancemoney.com/can-a-capital-loss-carryover-to-the-next-year-2388983
Tax-loss harvesting is when you realize a capital loss on purpose so that you can use it to offset gains and income in the future.

Also, it's going to take you 20 years of dishonesty and lies on your future tax returns to recoup that 60k loss:

The IRS allows you to deduct $3,000 from your taxable income if your capital losses exceed your capital gains.
Capital losses beyond $3,000 can be rolled over to next year to offset capital gains and ordinary income.

It is why doing things like selling 2 btc at a 60k loss  that carries over is not that stupid. If you sell btc at a gain a year or more later you pay no tax.

Do it does not. Just pay your taxes and problem is over.

Please do not tell me that you guys did not expect this to happen! It was just a matter of time before IRS starts collecting data from the crypto exchanges. And just do not blame IRS, any other country will do the same. Even in my country, the government has mandated for the crypto exchanges to share there user data with the tex authority.

Us once you to understand one simple thing. If you are using cryptocurrency you got to pay taxes. They are slowly closing out all other avenues for crypto users to skip the taxes.

I can’t say anything with confidence about crypto exchanges that they transmit data to the IRS, and perhaps this is done upon request. But foreign banks are required to transfer data on the accounts of American citizens to the IRS. And this is all very interconnected.

AFAIK, crypto exchanges outside of the US don't report customer tax information to the IRS. Legally speaking, however, US citizens are supposed to self-report trading activity on these exchanges. Its hard to imagine a scenario where international exchanges would provide customer data to the IRS... If they do report it to US authorities, it would be more likely because they are cooperating in a federal investigation for crimes not related to tax fraud.

Developers of these services will get into trouble as they may be arrested or prosecuted, and people known to them will be forced to add side doors or identity verification procedures. Therefore, using open source services from unknown developers with the ability to host them is safer than using a DEX hosted on servers or closed source.
I am not calling here for non-compliance with IRS, but if it is difficult for you to comply, you should move to a country where taxes are lower or restrictions on cryptocurrencies are non-existent.

Well, if you can give over a Billion Dollars to Israel to build a "Iron Dome" and to fund the Ukraine to fight the Russians and also spend more than 1 Trillion Dollars on the war in Afghanistan.... then you have to get the money from somewhere.  

It is expensive to be the global hero in all the conflicts in the world, but I guess Crypto currencies should also contribute to funding these wars, because it's the tax payers that are paying these bills.  

Imagine all that money going into a cheaper Health care system for their own people or proper funding to combat crime and drugs.  

Someone said the same thing about authorities not pursuing a case if the cost exceeds the benefits or something like that. I think it's a common occurrence around the world that the tax collectors prioritize bigger fish. The thing with the data collection is that they will still have your information at the end of the day. You may escape the audit for now but who knows what happens when you make it big?

Don't they have a database for all their users? I'm assuming they're still required to keep a few years of data.

I don't live in the US, but I understand that this type of scenario might come up in our country as cryptocurrencies gain more popularity. The term "obligation" clearly implies that we, as taxpayers, need to ensure that we maintain proper records of our trading activities. It's like we become business entities responsible for maintaining financial statements to determine our tax liabilities. I bet not all profitable crypto traders are really committed to reporting their tax obligations. Some might not even keep track of their trading transactions.

I'm curious about the consequences of failing to report. What kind of sanctions could we potentially face if the IRS decides to conduct a thorough audit?

Sure that's true, but are we gonna trust these exchanges?


You know, there's this saying that goes, "It's only called cheating if you get caught." But if you can employ some accounting tricks that make your actions appear legally as "tax avoidance," then there's probably no risk involved.

This does not surprise me one bit, it’s the price we have to pay for increased adoption, more widespread usage & higher prices. Service providers have to get in line & satisfy what regulators demand. As long as you pay your taxes & don’t commit financial crimes it shouldn’t really bother you.

I'm friends with a retired tax collector who all but assured me that the chances of being audited for not reporting crypto-related stuff were slim. First of all, as an American, you're only subjected to taxes on trades made on exchanges that report data to the IRS. This may already be all major America-based crypto exchanges, but if you are a casual trader who, let's say, has less than $30k of tax obligations in a year, you are highly unlikely to be audited. This is because the cost of the audit exceeds the amount the IRS could potentially recover during the course of collections.

If you are using exchanges that don't report to the IRS, then the activity on those exchanges may have well never existed at all...

BTW I'm not advocating that people cheat on their taxes, just relaying info from a knowledgeable source.

The plan is the same or sounds very similar to the one the European Union is trying to implment, which in short tries to control Bitcoin transactions like banking transactions. Only P2P and transactions made from one's custodial wallet with non-EU entities would escape. But of course, if the USA follows the same path and more and more countries join, in the end there will be less and less room for freedom.

you can say that but they have other things in mind. to put DEXs on the same footing as places like coinbase.

For this reason, the proposal states that the IRS expects some decentralized exchanges and selfhosted wallets may be forced to report their customers’ private information.



enjoy those things while they last because there are people behind sites like Bisq and Localmonero. And if the IRS comes breathing down their neck they'll drop USA customers like a hot potato.

The premise seems to be partly based on “whether a person is in a position to know information about the identity of a customer, rather than whether a person ordinarily would know such information.” The proposal states that this distinction is made because some platforms “have a policy of not requesting customer information or requesting only limited information [but] have the ability to obtain information about their customers by updating their protocols.”

They can bend terms, laws and create new laws to regulate crytocurrency market more and to get more tax for government.

The PATRIOT Act comes to cryptocurrency
Why KYC is extremely dangerous - and useless?

Don't do KYC, use DEX as much as you can do.
No-KYC Exchange Encylopedia
https://bitcoiner.guide/nokyconly/
https://kycnot.me/

https://cointelegraph.com/news/irs-proposes-unprecedented-data-collection-crypto-users

The IRS is looking to require crypto service providers to collect unprecedented swaths of data about their users — including names and Social Security numbers.

i'm sure coinbase already does that but i guess now they want even more places to do that like decentralized exchanges...hmm


Recalling back to 2021, the Infrastructure Investment and Jobs Act was about building roads, bridges, and the like — it was not about cryptocurrency or financial reporting. It wasn’t until funding was desperately needed to offset spending that members of Congress slipped in two provisions to increase financial surveillance over cryptocurrency users. Their argument was that increasing surveillance would increase tax revenue, effectively accusing cryptocurrency users of tax evasion.

bitcoin is not for usa people. period. not after this type of thing. who wants to be a sitting duck? being involved in crypto just puts a big X mark on your back if you're a usa citizen...