IRS Attack Dog Will Target US Bitcoiners and Soon…

IRS Attack Dog Will Target US Bitcoiners and Soon…

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Recent news about the IRS and bitcoin is disturbing enough, but it is the tip of an iceberg known as FATCA. American bitcoiners should be aware that their transactions of the past few years could endanger them.

Also read: IRS Demands Coinbase Records In Surprise Tax Probe

IRS Sets Its Sights On Bitcoin Users

The visible news: On November 18, a headline at Coindesk announced, “The IRS is Seeking Data on Coinbase’s Bitcoin Customers.” The article stated, “it seems, the IRS is looking to more aggressively police digital currency users in the US, and the [tax] investigation itself focuses on taxpayers who transacted between 2013 and 2015.” The investigation rests on a “John Doe” warrant. The “John Does” of interest are Americans who use bitcoin to evade tax reporting and payment requirements. The goal is almost certainly to audit non-compliers. Unfortunately, since the focus is on past transactions, a proactive response is difficult.

Currently, the matter is on hold. A Coinbase customer has filed suit to block IRS access to records, but the suit is unlikely to prevail; the IRS wins 90% of such cases. Coinbase is also resisting the IRS, but it will almost certainly comply under a court order. The brake on the IRS is not likely to last.

Meanwhile, a key aspect of the IRS demand is under-discussed. The agency clearly wants to extend the Foreign Account Tax Compliance Act (FATCA) to cover bitcoiners.

What Is FATCA?

fatca_bantrab_img_1_-56128f0dafda5The iceberg: FATCA is the enforcement mechanism for a tax policy called Report of Foreign Bank and Financial Accounts (FBAR). FBAR spells out the compliance requirements of “United States persons” who have foreign accounts that amount to $10,000 or more at any point in one year. Those accounts and other assets are considered taxable by the IRS even if the “United States person” lives and earns abroad. FBAR has been less than effective in collecting taxes, however, because the IRS must rely on voluntary reporting, snitches or luck.

Enter FATCA. Passed in March 2010, FATCA imposes extensive requirements on foreign banks and financial institutions to report on the accounts and transactions of American clients. It does not target individuals but institutions. Or, rather, it targets individuals by strong-arming institutions to provide open access to their accounts.

A sense of how aggressive FATCA is can be gleaned from its sweeping definitions.

For example, the definition of an American with tax liability includes ‘accidental Americans.’ These are people who might have never set foot on U.S. soil but have at least one American parent and so are considered dual citizens. Thus, Canadian-born Ted Cruz could run for President because his mother was American. An estimated 1 in 20 Canadians are either American transplants or accidental Americans. Those classified as American by FATCA are legally required to file returns and pay whatever taxes the IRS proscribes for foreign assets; it doesn’t matter if taxes are being paid to the foreign government as well.

The definition of a foreign financial institution is equally broad. The standard one is “[a]ny foreign entity that: Accepts deposits in the ordinary course of banking or a similar business such as banks and credit unions. Holds financial assets for the account of others as a substantial portion of its business such as brokerages or custodians.” It currently includes security brokerages and could easily be expanded to include bitcoin institutions such as exchanges.

It is technically true that the U.S. cannot compel foreign institutions to obey IRS regulations. But powerful ‘incentives’ are in place. For example, the U.S. threatens to withhold up to 30% of any U.S. security transaction from a noncomplying bank.

In Forbes (October 19), tax attorney Robert W. Wood explained:

Non-compliant institutions are frozen out of U.S. markets, so there is little choice but to comply. FATCA cuts off companies from access to critical U.S. financial markets if they fail to pass along American data. More than 100 nations have agreed to the law. Countries must agree to the law or face dire repercussions.

FATCA almost certainly wants to plunder the untapped wealth of the bitcoins owned or traded by “United States persons.” The first ones targeted will be natural-born Americans, who are low-hanging fruit; those who are more difficult to track, such as accidental Americans, are likely to be next. And the first step in uncovering all of them is to demand compliance from the financial institutions of cryptocurrency, such as Coinbase.

Indications That FATCA Will Strike

Several compelling indications exist. Two are particularly significant.

ct-irs-tax-audit-mistake-problem-0306-biz-2014-001First, in March of 2014, the IRS issued a notice stating that digital currencies were to be taxed as property. This has sweeping implications which were spelled out in a 16-part FAQ. For example, wages paid in bitcoin are subject to income tax; goods and services are part of reportable gross income; losses and gains in bitcoin value are capital gains in many instances. These policies have had little impact on the digital community because the IRS lacked an enforcement mechanism.

A FATCA that targets the financial institutions could become an effective enforcement mechanism – that is, if the institutions comply. Again, the enforcement will undoubtedly start in the United States. But, given the agility with which digital currencies can flee across borders, the IRS is likely to swiftly go after foreign exchanges in the same manner as it went after banks.

A November 13, 2014, Bloomberg article, entitled “Bitcoin Accounts May Be Subject to FBAR, FATCA Reporting,” stated,

Eventually, experts said, it is even possible that the foreign exchanges themselves may be considered foreign financial institutions (FFIs) that have to report the accounts to the IRS under…FATCA. 

The “eventually” seems to be arriving. Indeed, the process has been unfolding for over a year now. Bitstamp, which has offices in the UK and Luxembourg as well as America, states in its Terms of Use:

With respect to US residents, we also may share your information with other financial institutions as authorized under Section 314(b) of the US Patriot Act, and with tax authorities, including the US Internal Revenue Service, pursuant to the Foreign Account Tax Compliance Act (“FATCA”), to the extent that this statute may be determined to apply to Bitstamp Ltd. “Personal Information” refers to information that identifies an individual, such as name, address, e-mail address, trading information, and banking details. 

In the big picture, the IRS’s attempt may be unsuccessful because of the unique nature of cryptocurrencies. In the smaller picture, however, the brute force of its attack could devastate many individuals.

Second, on November 18, 2016, a court document “had detailed testimony in support of issuing the summons” against Coinbase. Daniel Winters, a specialist in cryptocurrency taxation, recently pointed to a rather ominous aspect of that document.

The IRS agent who wrote the declaration is extremely experienced regarding offshore arrangements to avoid paying taxes. He works in the Offshore Compliance Initiative, an IRS program the purpose of which is finding taxpayers who have hidden money offshore and avoided paying their taxes. The agent is now assigned to find taxpayers that used bitcoin to avoid paying taxes. 

Winters also pointed to the IRS agent’s past involvement in auditing a taxpayer and two corporations who used offshore “arrangements” to avoid taxes. Winters commented, “[t]he IRS audit did not go well for the taxpayers.”

Conclusion

Americans or “United States persons” who have used financial institutions, such as exchanges, for their bitcoins should be aware that the past few years worth of transactions are vulnerable to IRS scrutiny. Winters advised, “You may not be informed if your records are sent to the IRS, and may find out only when you receive a nasty letter from the IRS demanding payment of the tax due on the bitcoin income.”

If there is a solution to this situation, bitcoiners had best forge it now.

What do you think about the IRS targeting U.S. bitcoin users? Let us know in the comments below.


Images via Shutterstock, and Pixabay. 


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  • Dave

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  • Good morning all. At least, it is morning on my farm in Canada from which I write. I regret being so negative in my article but the measures I describe are what I see on the horizon and I believe people — not merely Americans — should be forewarned. I will be dropping by the discussion board today and tomorrow to answer questions and to chat. Chin up. Bitcoin is still the solution; government is the problem.

  • Brad R

    This highlights one of the weaknesses of Bitcoin: the fact that there is a public record of all transactions. It would be a fairly small problem for an agency with the resources of the IRS to begin matching up Bitcoin transactions with real people. What is needed is a cryptocurrency that can also guarantee anonymity; Bitcoin was never designed to do that.

    • Alex

      My money is on Monero. Literally.

  • danielwintersglobaltax

    @wendymcelroy:disqus I’m Daniel Winters. Available for input toward future articles on Bitcoin.com. http://globaltaxaccountants.com/ I assume you realize that FATCA and FBAR are federal laws for which penalties start at $10,000? I would be careful about even the mildest hint of advocating avoidance of said laws. “If there is a solution to this situation, bitcoiners had best forge it now.” So, basically you are saying that bitcoiners should find a way to hide their Bitcoin income and violate federal law by not reporting on their FBAR? We’re not exactly talking about a civil rights march that occurs without a permit, are we?

    • Daniel…I am delighted and flattered to have you on the commentary thread. Your expertise is recognized and appreciated. You may not realize that bitcoin.com is a forum established by Roger Ver, who is an libertarian anarchist and voluntaryist (as am I) who believes taxation is theft. Even if I did not so believe, the FATCA and FBAR policies are almost unprecedented as government overreach into the pockets of productive people. They are unjust.

      As a general principle, I do not think people have a moral obligation to obey unjust laws; indeed, morality indicates the opposite. You are quite correct, however, that there is a legal obligation and people must weigh implications, consequences etc. for themselves. I cannot and do not tell people what to do with their lives. I do not and would never tell people to jeopardize themselves or their families. But I will provide the facts and the analysis from my own perspective.

      The best solution, IMO, is the one suggested by another poster. Namely, to forge a truly anonymous protocol. BTW, yes, we *are* talking about something as important as a civil rights march (with or without a permit). The right of a peaceful individual to the unmolested enjoyment of his or her own person and property is the basis of all civil rights. BTW, and I trust you will forgive me if I cannot resist a comment — a civil rights march that requires a government permit is a contradiction in terms.

      • Fritz Knese

        Bravo!

      • danielwintersglobaltax

        Wendy, I met Roger Ver when he was in New York in May & we had a nice chat. As a tax accountant, obviously I don’t believe taxation is theft. I’m also the staunchest supporter of First Amendment freedom of expression you will ever see. You’re right, a civil rights march that requires a permit IS a contradiction in terms. That being said, this morning I spoke with a tax attorney regarding serious issues that could result in criminal investigation. While people may believe that paying taxes is unjust, the consequences of not paying taxes are very real, can result in huge fines and even loss of one’s personal freedom. Tax protester arguments are routinely thrown out of court and are not a defense for not filing FBARs. I appreciate your perspective, but the IRS and judges will not care. They’ll just assess fines and levy bank accounts. Just a warning.

        • I can definitively state that your comment is absolutely false, because I
          CURRENTLY HAVE a lawsuit in the federal courts on the Common Law Tort
          side of the court waiting for a trial by jury. I have filed charges of
          misconduct against the federal judge and all four DOJ agents for their
          treasonous acts. Not a single one of them has taken any further action
          in my case. Otherwise I will have all of them arrested under a code for
          which the penalty is ‘death by hanging’. It would be very bad PR for the
          same DOJ agent who put Irwin Schiff in prison until he died Oct. 2015
          to go to prison for his trespass upon my case. The case has been
          re-assigned to a magistrate.

        • Daniel: There is no question that you are giving sound legal advice and providing a valuable service to people who are forced to comply with what I believe is an unjust policy. The difference between us, perhaps, is that I do not disapprove of people who choose to disobey or to evade obedience. But I do not wish to ascribe reactions to you that you may not have.

          BTW, I make no assumption about your political positions from your profession. One of my best friends is an IP attorney who is adamantly against intellectual property.

  • American Overseas

    I am flabbergasted by your lack of accuracy in reporting! You wrote: “FATCA is the enforcement mechanism for a tax policy called Report of Foreign Bank and Financial Accounts (FBAR).
    FBAR spells out the compliance requirements of “United States persons”
    who have foreign accounts that amount to $10,000 or more at any point in
    one year.”

    I have been intimately involved in the fight for the rights of the 9M Americans overseas (latest US State Dept. figure), Green Card holders living overseas, Accidental Americans, the associated affected populations, and their respective families since the implementation of FATCA. This fight is both in the US and globally with countries’ governments.

    FATCA HAS NOTHING TO DO WITH FBAR, FULL STOP! FATCA is the enforcement tool of the US practice of Citizenship Based Taxation. It requires through its IGAs (Inter-Governmental Agreements) which it has forced under threat of a 30% withholding penalty country’s to sign and to which its respective financial institutions to adhere. They must search for “US indicia” as outlined in the IGAs hence whey Accidental Americans are caught up in this Kafkaesque US policy over-reach. The ONLY individual FATCA reporting is when the individual meets the threshold. THIS IS DIFFERENT THAN FBARs!

    I highly encourage you to make sure you information is accurate BEFORE you write an article.

    If you want to learn more, you can consult and/or join the American Expatriates group on Facebook: https://www.facebook.com/groups/AmericanExpatriates/

    • Thank you for your comment. I think you have misread. I do not claim and the article does not claim that FATCA has reporting requirements for individuals. Indeed, this is a key and noted difference between FBAR and FATCA. I make it clear that the reporting requirements of FATCA are for institutions which document the accounts and (in many cases) other foreign financial holdings of individuals who are legally liable for taxation but who often have not filled out tax forms. (BTW, I insert a great many links to original sources, including gov. documents, so that people can verify statements for themselves.)

      I’ve been tracking FBAR and FATCA for years now and I do not claim that its only use by government will be to discover legally taxable but unreported assets around the world. For the purposes of bitcoin.com and my article, however, that is the relevant use and purpose. FATCA will and does act as a means by which to discover the foreign wealth of “United States persons.” It is difficult to argue that it has not been used in this manner.

      I quote from Golding and Golding lawyers “FATCA Audits | IRS & Compliance by Individuals, Banks & Foreign Financial Institutions”: “Essentially the purpose of FATCA is to reduce the abuse of U.S persons and Foreign Financial Institutions of promoting foreign tax shelters and tax havens to avoid paying U.S. tax on foreign assets as well as reporting assets and income to the IRS and DOT.” http://www.goldinglawyers.com/fatca-audit-attorney-irs-compliance-by-individuals-banks-foreign-financial-institutions/ It is not difficult to find dozens of other legal opinions and government documents in the same vein.

  • At least on the acceptance side, one can opt out of both customer data collection and business data collection using permissionless merchant tools from sites like Blockonomics.co. No need to submit all that info to a Bitpay or Coinbase and wait for approval just to invoice with Bitcoin.

    • That’s exactly the sort of solutions that are required. Only across the board. Thanks, Patrick. I’ll click thru on the link.

  • Fritz Knese

    H8i Wendy. As you know I am not big on using bitcoin largely because I have anticipated government going after it sooner than later. I have always liked the idea of cash and usable products. But with India and Venezuala showing how to screw everyone by recalling cash, I am unsure if anything is safe.
    Don’t apologize for being negative. The situation warrants it! Thanks for another great article!

    • Hey Fritz: Good to see you posting. I owe you an email…to say the least. I see bitcoin — or cryptocurrencies in general — as being bright spots in what is currently a rather dark world. That’s why I don’t like being negative about the area. But, as it goes mainstream, it will and does encounter all the disadvantages of mainstream currencies…including the attention of federal agencies. Being taken seriously is a mixed blessing/curse.

      Stay warm, my friend.

      • Fritz Knese

        I appreciate you being able to rise above the cynical position I always seem to find as my default position. “When you are up to your ass in alligators it is sometimes hard to remember that your original intention was to drain the swamp!” Keep up the good work Lady!

  • Please see my lengthy and informational comments on this article at the link below. It should have almost everything needed to defeat the IRS. The IRS is a private, foreign corporation registered in Puerto Rico for the Federal Reserve Bank (also a privately-owned foreign corporation). Contrary to intentional misinformation and mis-education, the IRS and FRB are NOT agencies of the federal government; and the ‘Tax Courts’ are NOT impartial, government courts; but yet another department of the IRS. Most people cannot win in ‘Tax Court’.

    This means, any DOJ agent who represents the IRS against anyone of the United States of America is literally committing TREASON (by USC definition) since the DOJ is only able to represent federal agencies and federal employees.

    TREASON:
    “Treason against the United States, shall consist only in levying War against them, or in adhering to their Enemies, giving them Aid and Comfort. No Person shall be convicted of Treason unless on the Testimony of two Witnesses to the same overt Act, or on Confession in open Court.” Constitution for the united states of America; Article III, Section 3, Clause 1

    18 U.S. Code § 2381 – Treason
    “Whoever, owing allegiance to the United States, levies war against them or adheres to their enemies, giving them aid and comfort within the United States or elsewhere, is guilty of treason and shall suffer death, or shall be imprisoned not less than five years and fined under this title but not less than $10,000; and shall be incapable of holding any office under the United States.”
    [SOURCE: https://www.law.cornell.edu/uscode/text/18/2381%5D

    18 U.S. Code § 2382 – Misprision of treason
    “Whoever, owing allegiance to the United States and having knowledge of the commission of any treason against them, conceals and does not, as soon as may be, disclose and make known the same to the President or to some judge of the United States, or to the governor or to some judge or justice of a particular State, is guilty of misprision of treason and shall be fined under this title or imprisoned not more than seven years, or both.”
    [SOURCE: https://www.law.cornell.edu/uscode/text/18/2382%5D

    18 U.S. Code § 2384 – Seditious conspiracy
    “If two or more persons in any State or Territory, or in any place subject to the jurisdiction of the United States, conspire to overthrow, put down, or to destroy by force the Government of the United States, or to levy war against them, or to oppose by force the authority thereof, or by force to prevent, hinder, or delay the execution of any law of the United States, or by force to seize, take, or possess any property of the United States contrary to the authority thereof, they shall each be fined under this title or imprisoned not more than twenty years, or both.”
    SOURCE: https://www.law.cornell.edu/uscode/text/18/2384

    18 U.S. Code § 2390 – Enlistment to serve against United States
    “Whoever enlists or is engaged within the United States or in any place subject to the jurisdiction thereof, with intent to serve in armed hostility against the United States, shall be fined under this title or imprisoned not more than three years, or both.”
    [SOURCE: https://www.law.cornell.edu/uscode/text/18/2390%5D

    And anyone who has been harmed by ANY of the IRS employees (they are not agents or officials) can sue all the IRS employees under
    *26 U.S. Code § 7426 – Civil actions by persons other than taxpayers* (which is an obfuscated way to say ‘non-taxpayer’ to hide the fact that ‘non-taxpayer’ IS a term)
    (h) Recovery of damages permitted in certain cases
    (1) In general
    Notwithstanding subsection (b), if, in any action brought under this section, there is a finding that any officer or employee of the Internal Revenue Service recklessly or intentionally, or by reason of negligence, disregarded any provision of this title the defendant shall be liable to the plaintiff in an amount equal to the lesser of $1,000,000 ($100,000 in the case of negligence) or the sum of –
    (A) actual, direct economic damages sustained by the plaintiff as a proximate result of the reckless or intentional or negligent disregard of any provision of this title by the officer or employee (reduced by any amount of such damages awarded under subsection (b)); and
    (B) the costs of the action.

    (h)(2) and (h)(3) do not apply to non-taxpayers

    The ONLY people who are, by law, a ‘taxpayer’ and ‘liable’ for the federal income tax are described in

    *26 U.S. Code § 6331 – Levy and distraint*
    (a) Authority of Secretary
    If any person liable to pay any tax neglects or refuses to pay …. Levy may be made upon the accrued salary or wages of any officer, employee, or elected official, of the United States, the District of Columbia, or any agency or instrumentality of the United States or the District of Columbia ….

    So what is the definition of “taxpayer” and “person” according to this chapter of United States Codes (U.S.C.)?

    *26 U.S. Code § 7701 – Definitions*
    (a) When used in this title, where not otherwise distinctly expressed or manifestly incompatible with the intent thereof –
    (1) Person – The term “person” shall be construed to mean and include an individual, a trust, estate, partnership, association, company or corporation.
    (14) Taxpayer – The term “taxpayer” means any person subject to any internal revenue tax.

    (d) Commonwealth of Puerto Rico – Where not otherwise distinctly expressed or manifestly incompatible with the intent thereof, references in this title to possessions of the United States shall be treated as also referring to the Commonwealth of Puerto Rico.
    [Say what?!]
    SOURCE: https://www.law.cornell.edu/uscode/text/26/7701

    The definition of “United States” is found in *28 U.S. Code § 3002 – Definitions*
    (15) “United States” means –
    (A) a Federal corporation;
    (B) an agency, department, commission, board, or other entity of the United States; or
    (C) an instrumentality of the United States.
    SOURCE: https://www.law.cornell.edu/uscode/text/28/3002

    Therefore, the “United States” is literally limited to the area of Washington D.C. … the ONLY area where the “Federal corporation” of the “United States” is physically located. This is per the definitions and codes the federal government and IRS follow.

    LINK to previous comments on article: “Coinbase Will Oppose Government Petition in Court” By Jamie Redman on November 21, 2016

    https://disqus.com/home/discussion/bitcoincom/coinbase_will_oppose_government_petition_in_court/#comment-3012614212

    • danielwintersglobaltax

      This is a tax protester argument that would be thrown out of court immediately. In such cases, the judge assesses a substantial fine,which the taxpayer must pay as the courts can always find your bank account. If you actually try this in court, you will lose a lot of money. Don’t try it. Disagree with me, I don’t mind. But please believe me, the judge will assess a heavy fine and you will lose a great of money. Just a little advice.

      • I can definitively state that your comment is absolutely false, because I CURRENTLY HAVE a lawsuit in the federal courts on the Common Law Tort side of the court waiting for a trial by jury. I have filed charges of misconduct against the federal judge and all four DOJ agents for their treasonous acts. Not a single one of them has taken any further action in my case. Otherwise I will have all of them arrested under a code for which the penalty is ‘death by hanging’. It would be very bad PR for the same DOJ agent who put Irwin Schiff in prison until he died Oct. 2015 to go to prison for his trespass upon my case. The case has been re-assigned to a magistrate.

    • Interesting read, Heather.

  • Chris Anpropian

    Told ya so. Bitcoin is the state’s fantasy. The state wants to abolish cash, wants all transactions recorded digitally. You suckers fell right into it, the whole time mocking anyone who tried to warn you, even when bitcoins were seized, which was supposed to be impossible, when people got thrown in the rape cages for using it, which was supposed to be possible, when exchanges collapsed, and so on. And, of course, you can’t replace state counterfeit backed by their dominating guns with a private counterfeit. Only money, the most salable good, can replace the state’s counterfeit, so that people, not just fanatical utopians, naturally and spontaneously want it in order to trade for their final objective, can overcome the problem of double coincidence of wants. The vast majority of the world has zero interest in accepting bitcoins in exchange for their wares, because it never had a non-monetary market price. Thus it could never serve or rational economic calculation either. Its completely and utterly dependent on the fiat counterfeit which provides the market prices for all goods. Doubt this? Stop giving fiat in return for bitcoins, only let people buy in and not out. I dare ya.

    http://peacefreedomprosperity.com/7776/inability-bitcoin-serve-rational-economic-calculation/

  • These laws are a real pain in the butt, I keep on having to go to Deutsche Bank to re-open an account that literally just has a couple 100 euros in it to pay EU phone bills that gets frozen occasionally because there is a constant stream of paperwork to fill out, because I am a dual US/EU citizens so flags get fired off all the time.

    I know they were created with the best of intentions, but it just causes a lot of red tape, paperwork and inconvenience…. for what? Rich people already have enough lawyers, lobbyists and accountants to not only avoid taxes but get gov’t money financing their projects and therefore their lifestyle!

    • Hey there, Prophet X: I have heard so many stories similar to your own. In fact, many Americans are utterly unable to open accounts abroad, even in the foreign nation in which they reside, because banks either do not want to risk violating FATCA or they do not wish to absorb the expense of the paperwork required to have American clients. Meanwhile, America has become the biggest tax haven in the world…which makes you wonder if that was an intentional or unintentional consequence.

      The best hope of FATCA collapsing is that America refuses to share the equivalent of the information that it demands from others and various nations (including Switzerland) are rebelling at the one-way flow. I doubt FATCA will be threatened by Trump because he is against Americans setting up shop abroad, sending money abroad, etc. He is likely to support an “America First” tax and banking policy, which FATCA certainly embodies.

  • ichi

    > IRS Sets It’s Sights
    “it’s” = “it is”

    • Tracer289

      The wise man opens his mouth because he has something to say.
      The fool open his mouth because he has to say something.

      Got any poignant comments on the actual substance of the article or are you part of the robot grammar squad??

      • Nick Niceman

        You better sit in your military cage and protect your garage. damn constitutionalist.

  • Tracer289
    • Nick Niceman

      Yep move away from lighting own bitcoin activity.
      As it was for life is – no one can control nothing. So does govs can’t control what was NOT INVENTED In us and used by own peoples. Govs DEMAND on peoples – NOT OTHERWISE.
      Lets see example – simply cut the paper and call it “star” and somehow way i put 12 millions usd in it.
      Should i pay taxes. TAXES IS FORM OF CONTROL OF MASS ORDER.
      THAT DEAD ORDER WHICH CAME FROM CANNIBALS – DOESN’T EXIST!
      Respect bitcoin and altcoins growth.
      BE CLEARLY – TAXES CREATED FROM THOSE JERKS WHO WANTED TO COUNT PEOPLE.
      AGES AGO – ONLY RICHES AND AUTHORITIES HAD MONEY AND PAID TAXES, THOUGHT AS MOVEMENT TO DO “RIGHT PEOPLE” INCREASED ITS VALUES AND NOW CALLED SEMITIC CULT – INCREASED ALL THE BAD FROM THEIR “ORDER”.
      GOOD BYE S***## M**### FAGS.

    • Hello Tracer: You write, “The IRS isn’t targeting Bitcoin.” You are right and wrong at the same time. The IRS is not uniquely targeting Bitcoin for taxation as opposed to fiat currency. It *is* targeting Bitcoin in the sense that it is now treating cryptocurrencies as currency, which it has struggled to do for some while but now is stumbling toward what may be an effective enforcement mechanism. That’s what the IRS has lacked.

      I am generally opposed to a confrontational pose toward federal agencies but, even if people decide to walk that path, there is nothing mutually exclusive about doing so while you are informed of the risks and evolving dynamics of the IRS’s approach to bitcoin. Good luck with whatever freedom strategy you use.

      • Tracer289

        Wendy McElroy,
        Thank you for informing the Bitcoin community of these impending actions by the mendacious IRS. I am grateful that I am able to share my truth in the comments section of your article.
        It is my hope that after you have made people aware, they may seek further clarification.
        I attempted to steer them towards a solution that is not easy, but is lawful and effective.

        So thank you again. Not only for informing the Bitcoin community that a rabid dog is loose.
        But also for allowing me to use your article to offer additional relevant information to the community; how to handle a rabid dog.

        Respectfully,
        Tracer289

  • Thanks Wendy, that was a good read

  • Alex

    Presumably “Accidental Americans” are only vulnerable if they admit to being an American. Those people who have never set foot in the US would not normally be under suspicion.

    • The IRS is “reaching out” to Accidental Americans/Canadians citizens about whom they know for one reason or another. Perhaps the parents (or one of them) has filed forms in the U.S. — it doesn’t have to be tax forms. It could be part of the process of emigrating to Canada. Newspapers carry stories of children’s college funds being demanded by the U.S. and there are certain tax treaties that advocate for some reciprocity of benefits.

      Again, it seems to be the banks that are flagging “suspicious” people, and asking questions like place of birth. I’m sure this is happening around the globe and not merely, or even primarily, in Canada. One expat Canadian investor I know had an EU account cancelled because the bank’s service rep. asked him where he was calling from. He happened to be at a conference in States and so they gave him 30 days to close his account. The situation is not as easy to avoid as you may think.

      Moreover, many, many Canadians have family in the U.S. so they “set foot” in America frequently and it would be a great hardship to be unable to attend weddings, celebrations and funerals. Many more dual citizens do business of some sort in the States. I’m just glad I don’t have to deal with the bureaucratic madness, and that my family is spared.

      • Alex

        Collecting taxes is one thing, but collecting taxes from people who barely have anything to do with your country is the height of injustice. I consider it to be theft.

        • As we say in Canada, “Je suis d’accord” — I agree. Or as my husband and I abbreviate it “suisdac”.

  • Nick Niceman

    Laws and rules created for poor and narrow minded. don’t support trump like stards, do not support regimes including democratic regime in ukraine,east asia,latin america. regime or tsar is always poor or dead. there will be tsar ruling in US. Fake it off the road.

  • Nick Niceman

    russian story have proverb “king is naked” means poor…

  • Nick Niceman

    Bitcos and other gov independent – if not supported by people , guess how it will be developed.

  • Nick Niceman

    Bitcoin here to unlock your freedom and WEALTH! YES!

  • Claudio Levrini

    Thanks Wendy for the article. I do believe that every person that has the slightest interest in personal freedom should renounce USA citizenship and move/interact only with more reasonable countries like Mr ver did a while ago. I also hope that the coinbase issue will wake people up so they can start using more anonymous services to avoid the government thiefs.

  • The SECOND the IRS lays claim to impose Tax on Revenue from BTC… is the Second BTC becomes Live – Real Currency… You Cannot have it both ways… it’s Detantè!

    • Merry Christmas, Jack. Your standard of what is a “real” currency seems to involve or necessitate government recognition of the currency as “real.” Bitcoin has been real for years and will remain so whether or not a gov. approves it. A currency is nothing more than a medium of exchange that people accept; how widespread a currency it is relies on the level of acceptance. But as long as it is used as a medium of exchange, then it is a currency. Along the lines of…if a dog eats it, it’s dog food.