Open up, it's the IRS. We're here about the crypto tax you dodged The IRS has been granted a court order to collect records from a bank the agency said will help it identify US taxpayers who failed to report taxable income from crypto trades. Uncle Sam yesterday said it's specifically going after records from New York-based bank M.Y. Safra, which partnered with SFOX – a cryptocurrency prime …
Seriously? Is the writer of this logically challenged?
At least 10 could be far more and if the transactions are in the billions then the amounts substantial.
Is this another anti-gubmint American writer? What happened to El Reg and at least somewhat sensible UK writers?
Countries run on taxation. If you are raking in thousands, millions or billions from crypto then you need to pay your share.
Yep, to get a judge to approve this the IRS needs to establish it isn't a fishing expedition. They must show a high likelihood that getting the info they want will result in finding unpaid taxes, with evidence why they believe that.
I would bet they enumerated a few cases where people were audited for other reasons ("we see large sums of money moving in and out of your checking/debit accounts from another bank and this isn't remotely accounted for by your reported income, what gives?") and they found multiple people linked to that bank.
So their petition to the court was probably "hey we found 10 people all linked to this bank and it looks like that is only the tip of the iceberg".
@DS999 "So their petition to the court was probably "hey we found 10 people all linked to this bank and it looks like that is only the tip of the iceberg"."
No it probably did not. Otherwise the IRS statement would have said it found at least ten people linked to the bank rather than just linked to the broker as it is stronger justification for the warrant.
"Further, IRS investigations have identified at least ten U.S. taxpayers who used SFOX’s services for cryptocurrency transactions but failed to report those transactions to the IRS as required by law."
@Cav "Seriously? Is the writer of this logically challenged?"
Short answer. No.
Long answer. The IRS state this
"SFOX has over 175,000 registered users who have collectively undertaken more than $12 billion in transactions since 2015."
and this
"Further, IRS investigations have identified at least ten U.S. taxpayers who used SFOX’s services for cryptocurrency transactions but failed to report those transactions to the IRS as required by law."
So out of 175,000 the IRS has found 10* (0.006%) who failed to report transactions to the IRS. On the information provided by the IRS I can see the authors incredulity to the issuing of a John Doe warrant to SFOX. Especially when IRS statement also said this
"There is no allegation in this suit that SFOX has engaged in any wrongdoing in connection with its digital currency business."
*If the IRS had identified significantly more than ten, their statement would have reflected this, eg at least 20, 100, 1000 etc.
Maybe it is because i am a non native english user but there seems to be misinterpretation of the total sum in "transactions" that hints in the direction those "transactions" equal profits.
"SFOX has over 175,000 registered users who have collectively undertaken more than $12 billion in transactions since 2015."
Are commissions and fees part of that sum ? Is there any information how much of the gross transaction sum is indeed profit ?
As far as i can see in cryptocurrencies, with the vast overhead of those brokers, banks and whatnot, i am not so sure that a significant percentage of the overglorified snowball/pyramid schemes called cryptocurrencies are really generating so much profit for the end user/"investor". Much less when transmuting the fairy gold pots back to "real" money.
Then again, the total sum of unpaid taxes might not matter as much as the expected income due to exxagerated fines.
On the other hand people trading crypto on these exchanges may in fact be honest and report their earnings in a timely manner which may indicate that KYC does the job it's supposed to.
Just because you want people that deal with crypto to be criminals it doesn't make it so.
What may actually be the case here is that the vast majority of people using these exchanges may not be making enough profit for their profit to be considered taxable...or those exchanges are tiny and don't have a lot of account holders.
>Countries run on taxation. If you are raking in thousands, millions or billions from crypto then you need to pay your share.
Life would be good if you could pay the IRS in cryptocurrency but unfortunately they want cash or cash equivalent. That means that if you're trading a highly volatile security, even indirectly, you are quite likely to trigger taxable events that will require virtual -- and fleeting -- profits to pay tax in hard cash.
Cryptocurrency isn't the only way you can get caught like this but its possibly the one area where a significant number of people have dabbled in unregulated, volatile, securities without having a clue what they're doing. The lessons are going to be hard and expensive. The people affected will complain that its not fair and they don't believe in The Man or whatever but its not going to change anything.
If you sell anything at a profit, you have to report it on your tax return. Crypto is no different than Pokemon cards or anything else.
Note that if you file your profits, you are also allowed to file your losses to offset them. Again, just like anything else.
The idea that because crypto doesn't want to be taxed it shouldn't be audited is absurd.
There's quite a few exempt items. For example, mechanical items, with watches and classic cars being very common tax dodges in the UK. You can also do dodgy stuff like investing your capital gains in art, taking a loan out secured on the value of the art, then spending the money having paid no capital gains tax.
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Who on earth said crypto doesn't want to be taxed?
What crypto wants, and a lot of people will agree, is to be taxed fairly as with anything. The guidance on crypto taxation is woolly at best and hard to comprehend for an average person at worst.
Seriously, the mental gymnastics anti-crypto people subject themselves to are astounding.
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"may have not been reported properly", said the IRS. That's a flimsy excuse for going on a fishing expedition.
Sundar Pichai may have broken into my house and eaten the last bag of crisps in my cupboard, but the plods surely aren't going to grab his phone's GPS location data to prove his possible guilt, based only on that statement.
Means "suspected but not proven".
It's one of several ways of paying lip service to "innocent unless proven guilty".
In this case, it appears that the IRS are pretty sure that there is significant unpaid tax, but don't know who should have paid it
Presumably they looked at the blockchain and the published figures for the exchange, and believe that indicates several entities subject to US have made significant profits that haven't been declared.
They can't prove who without that additional data, so they asked a judge.
A cryptocurrency, crypto-currency, or crypto is a digital currency designed to work as a medium of exchange through a computer network that is not reliant on any central authority, such as a government or bank, to uphold or maintain it. It is a decentralized system for verifying that the parties to a transaction have the money they claim to have, eliminating the need for traditional intermediaries, such as banks, when funds are being transferred between two entities.
If This is a Decentralized System That Isn't Reliant on Any Central Authority Such as a GOVERNMENT OR BANK...
Why Have Data of Transactions From 2015 Till Date..?
Why Demanding / Imposing Tax on a Decentralized System..?
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