Submitted via IRC for AnonymousLuser
IRS reminds 10,000 taxpayers that cryptocurrency is subject to taxes
By the end of August, an estimated 10,000 taxpayers will receive letters from the IRS warning them that they may owe back taxes on unreported cryptocurrency earnings. While it might not be immediately obvious, you must include cryptocurrency earnings when you file federal taxes. As with tax evasion for traditional currency, anyone convicted of evading crypto taxes could face up to five years in prison and a fine of up to $250,000.
In a press release, IRS Commissioner Chuck Rettig said:
"Taxpayers should take these letters very seriously by reviewing their tax filings and when appropriate, amend past returns and pay back taxes, interest and penalties. The IRS is expanding our efforts involving virtual currency, including increased use of data analytics. We are focused on enforcing the law and helping taxpayers fully understand and meet their obligations."
[...] While cryptocurrency may have once felt cutting edge, getting a letter from the IRS stating that you owe back taxes makes it automatically less cool.
(Score: 2) by Hartree on Monday July 29 2019, @03:35AM (8 children)
From the IRS website:
"If you barter, you must report on your tax return the fair market value of the products or services you received. Tax implications. Bartering is taxable in the year it occurs."
That dodge regularly gets tried and shot down.
And someone showing up with large amounts of unexplained wealth (material or currency) without having reported income can expect attention. Ask Al Capone's ghost about that one.
(Score: -1, Redundant) by Anonymous Coward on Monday July 29 2019, @03:59AM (6 children)
So the IRS seriously expects you to declare the fair market value of a couple of beers and some pizza when you help a friend move?
What if you happen to enjoy working with cars and help a buddy by taking care of theirs and s/he repays you by taking you waterskiing/sailing/just hanging out in the quiet of nature at his/her cottage? (Sweet! You get to indulge your hobby and spend time away from the hubbub of city life.) Do you have to report doubly because you got to have fun and relax? Who gets to define the fair market value of "fun"?
Wow. It's not just the American president who's a trainwreck. "Make up a number so we can take some of it. You're not allowed to have that much fun."
(Score: 0) by Anonymous Coward on Monday July 29 2019, @04:16AM (1 child)
It all started with the Whiskey Tax, which George Washington actually marched a conscripted army against protestors of (some of whom may or may not have inflicted violence on tax men coming to collect.)
It only took 4-8 years for the unfair taxation without (equal) representation to overcome America's promises to its destitute farmers, while making its city slicker 'factory' distillers taxes subsidized on the backs of the little people. And America today is the same way, only with debt and losses used to reduce the tax burden or 'offshore' tax debt to places more favorable to the wealthy.
America, meet the United Kingdom, you're not as different as the laws you once fought against, nor the values you claimed to be fighting for.
(Score: 2) by Runaway1956 on Monday July 29 2019, @05:58AM
https://www.history.com/topics/early-us/whiskey-rebellion [history.com]
Bolding by me:
There was talk of revolution and secession. Troops weren't deployed to collect taxes, they were deployed to put down an insurrection. Those Pennsylvania hillbillies were some real badasses, back in the day.
(Score: 2) by Hartree on Monday July 29 2019, @04:21AM
Welcome to the reality of living in almost any country with a legal system. Very nearly just by existing you are in violation of some law and can be prosecuted for it if it's convenient.
And as to those countries without an effective legal system, there's not even the fig leaf of law and due process to keep those in power from taking whatever they want.
(Score: 5, Informative) by AthanasiusKircher on Monday July 29 2019, @04:27AM (2 children)
No, but if you operate a moving business where you write contracts saying you get X number of pizzas per move and Y number of beers per move, and then redistribute these goods among friends and acquaintances to barter for other things to get other stuff you need, then the IRS will rightly accuse you of tax dodging.
It's not common today, but many people used to operate businesses more through contracts of the sort where "I give you X and you give me Y," but such transactions have always been subject to taxation for profits you make, even if those profits are in goods rather than denominated in dollars. If you set up a store and insist you will only accept goats for payment (perfectly legal by the way), if the fair market value of the goats you receive in payment is greater than the fair market value of the goods you are selling, then you're making a profit. And therefore you need to keep track of these values on the books and report them along with paying relevant taxes.
(By the way, this is actually why most businesses in the U.S. transact primarily in dollars. People often have a misunderstanding that it's "legal tender" laws that require that, but they don't. There's no reason your business can't be conducted in goats as the unit of exchange. The problem is that doing your taxes will be exceptionally difficult and the IRS will scrutinize you closely because businesses who try this sort of stuff are usually trying to dodge taxes. Cryptocurrencies are no different.)
As for your other scenarios, again, it's not about little exchanges -- it's about major transactions. As you may or may not be aware of, the IRS allows you to give gifts to other persons up to $15,000 per year without reporting or paying tax. More than that, and chances are you're trying to conduct some sort of shady business or tax dodge in transferring property without declaring it properly.
So if you do something nice for someone and they give you a gift in return, there's no tax implication. If you open a business doing this sort of thing for the sole reason that it avoids dollars, then you need to be sure you actually keep track of the value of goods going in and out. Similarly, if you are investing in something and sell it with a profit (true for many crypto investors, who were never interested in the currency aspect), then you need to report the investment income just as if you invested in stocks or mutual funds or property or whatever.
Pretending the law should be different in this case is just like Uber claiming it's not a taxi service, just "ride sharing," or that Airbnb aren't really "hotels" (just couch-surfing/sharing) and therefore shouldn't be subject to regulation and taxation.
Just because something is "on the internet" doesn't magically exempt it from laws.
(Score: 2) by Runaway1956 on Monday July 29 2019, @05:50AM
In '79 and '80, I was an assistant Scoutmaster in Gouldsboro, Maine. We held meetings in the old Gouldsboro town hall. The tax records caught my eye, one day, sitting tidily in boxes, row upon row. I picked a box labeled at random, and skimmed through the documents. Taxes assessed were paid in various goods, as well as cash. One person paid off with a half dozen chickens, another paid off with lumber, another with linen goods, yet another with lobsters. There was no indication from those records how those various goods were collected, warehoused, or dispersed, but the taxes were marked as "paid" upon delivery of the various goods. I can only presume that the constable and/or the sheriff had a logistics nightmare, caring for all the town's and county's property.
There was no such nightmare when I was stationed in Winter Harbor. Everyone paid their taxes with cash money by that time.
(Score: 0) by Anonymous Coward on Monday July 29 2019, @11:02AM
Your honor, I swear that one of my goats ate my business ledger. Not good enough? OK ... if my goats have value can I pay my taxes in goats?
(Score: 0) by Anonymous Coward on Monday July 29 2019, @04:08AM
What's next? The IRS demanding that you pay tax on the loot you collect during you D&D quests?