Topic: IRS sniffing around Coinbase - page 2. (Read 2297 times)

Your $800 coins will turn profitable soon. We have oscillated between $730 and $750 for too long.
Another move upwards seems to be on the cards now. 

They would be way better off going after general contractors and other independent workers who get paid in cash and never file. That being said, I've got no problem paying my long term capital gains if my $800 coins I bought ever turn a profit. :-)

You know what that ind of news looks like Oh look! Let's blame bitcoin as another great solution used by tax evaders general public will love it.
IRS are trying to look cool by targeting bitcoin because they can do very little vs. real way people are evading taxes, by using LEGAL means.
Tax optimization is a fact - no one care, it is legal. Another way creating shell companies and buying sending through them, again fully legal.

So, you plan to commit further crimes to cover up your first crime? That really only gets you so far, though I suppose it's an acceptable risk if you expect to get concurrent sentences. Carry on.

Who says I am going to spend all of it at one time? Besides there is the black market and there are ways to launder your money for a fee. Bitcoin just happen to make it all easier at some point of the process. Add a tumbler to your VPN + Tor usage then it would really be hard for the government to trace your trail.

I agree that they may flag your account because of a large-volume purchase. VPNs won't help, that's right, you'd need to get your account verified to transact with them. But what I really wanted to stress is that they will have a very hard time trying to figure out what you did with the coins.

I don't see a problem here either. The absolute same rules apply to bitcoin as an asset.

They think bitcoin is an asset, like shares, gold or property. So of course you have to report capital gains. If you bought shares with your debit card and then made a profit on selling it, you would have to report that too.

i assume you two have never used coinbase because the step one (the first line of Wind_FURY's comment) is how they can find out about you no matter what VPN you use.

when you sign up with Coinbase you give them all your information and then deposit from your bank (i think credit card also) they again know all your information. so no matter what you do with the coins next your account and bank account are flagged  because of purchasing a large amount of bitcoin.

How exactly are you planning to spend that kind of money? Are you just going to walk into, say, a Porsche dealership with a briefcase full of bills as though nobody's going to ask any questions?

That's right, I don't see how they can effectively enforce it either. Untangling a series of transactions you described would not be worth the effort (unless you are a high-profile target )and definitely cannot be automated.

Don't live in US > Don't care about IRS > Don't use Coinbase > Don't use large amounts to draw attention > or use face to face exchange with cash if you are so worried
where i live nobody cares about bitcoin which is a bad thing for adoption but the only good side is that there is no taxes ever on it.

of course you can always pay your freaking taxes and sleep easy at nights! just like when you do while trading Forex or stocks.

This will be another legal and a "paper trail" headache for the IRS. Imagine this scenario, I buy $100,000 worth of Bitcoins at Coinbase, transfer them to different addresses using an HD wallet. I gamble some in a sportsbetting website, buy altcoins with some at 3 different altcoin exchanges and then transfer them back to different addresses in my HD wallet. I cash out some using Local Bitcoins for a person to person transaction.

How will the IRS figure that out. Also let us pretend I use VPN + Tor since I am also a dark market user.

There might be some people who will get caught with something like this, however I would assume that it is far more likely that the IRS is going to target exchange users and not the average users who moved funds through the site at one time or another.

If there really was something that a lot of people should be worried about I would assume more people would be talking about it; something that isn't really happening yet. If they find something then it might start to generate some publicity.

It is great on the web there is zero reason to fill things out..  The company requires no information of mine to receive value.

Think about how fucked up this is. You buy something with cash or debit/credit card you don't report it, but you need to report every purchase using bitcoin? this is a serious attack against crypto, make no mistake.

Just speaking hypothetically of course. I never said I was doing any of this.

I'm neither a hooker nor a dope dealer nor a tax evader. Those things are illegal almost everywhere.

Only if you're foolish enough to keep all your coins in one wallet. As along as your coins are kept in as many separate wallets as possible, your risk is minimized.

Only wallets that can be traced to exchanges, personally identifiable purchases, payment services, online wallet apps, etc., are at risk of government snooping.

Be sure to separate your wallets into those with compromised anonymity and those that are fully anonymous.

Coinbase has millions of users. I would certainly think the irs will be going after some of the largest buyers/sellers to make an example, and that will happen pretty quickly. I think it will have a stifling effect on your average person who plays with it, which will definitely effect the price.
I'm not sure what Jimbo is talking about, but he should probably should keep his trap shut about his activities.

That is the current tax code. It's just that up till now they were having a difficult time enforcing that tax code due to the perceived pseudonymity of bitcoin. But now their strategy seems to be to go after businesses like coinbase that have lots of transaction data on users. Anyone who ever did business with a large bitcoin business is at risk here, which is the vast majority of users. They only need to know about a couple of transactions from your wallet and then they can use blockchain analysis to get the rest. This is why this case is very important. Unfortunately I don't think coinbase stands a chance of fighting this. This is bearish but I don't think most of the moonshot traders actually give a shit, especially since we won't see the true effect of this for many months/years when the IRS starts properly investigating this stuff, so price wise I'm not sure it will have much of an impact.


Problem is you take your anonymous Bitcoins and buy a pizza off of a merchant that uses coinbase for payment processing. The IRS pull that data from coinbase. Now the IRS know one of your Bitcoin addresses and your name and delivery address of said pizza. They can then see what other transactions happened on that Bitcoin address and other Bitcoin addresses that are spend-linked to it. If you bought enough pizzas they will have every transaction that ever happened in your wallet. So I hope you used an anonymous drop to get your pizzas.