Someday, somebody with a lot of Bitcoins is going to say “no.” | Hacker News Reader

Someday, somebody with a lot of Bitcoins is going to say “no.”

chralash.wordpress.com

15 pointsbrokenmusic15 comments

> When an individual puts his or her foot down and says, “no,” it’s usually in vain, since conventional assets can be frozen, garnished, or confiscated. […] And when [an individual who owns a significant amount of Bitcoins says], “no,” then the answer is, “no,” unless the state takes the confrontation to the next level.

Yes, I'm sure the IRS has never had to extract wealth from people who don't keep it in a banking account.

> If somebody gives up their Bitcoins because they were beaten by a monkey wrench, then we will know that we’ve unequivocally entered a new era.

I'm… pretty sure they'd just be arrested and placed in federal prison, like any tax evader.

you're equating bitcoin ownership to tax evasion? you can't pay taxes in bitcoins. the only novelty that would come out of such a situation (person allegedly dodged taxes, stored the 'ill gotten gains' as bitcoins) was that a judge and/or government declares your bitcoin wallet as an asset and requires you to forfeit it. now that would be a show to watch...

bitcoins are taxable assets, surely?

bitcoin income is taxable income.

> I'm… pretty sure they'd just be arrested and placed in federal prison, like any tax evader.

After taking all of your stuff to pay the taxes (and fines) of course.

And yeah, the IRS is very, very, experienced at extracting everything they can from people who hide their money.

If you're employed, they'll garnish your wages. If you're not employed or are "secretly" employed, they'll show up at your house/business (and they know the usual tricks people do to avoid them) and essentially start taking stuff until they think the bill is paid. They'll take your car. They'll take your furniture. If you're a restaurant, they'll clear out your cash register, take your equipment, and take all your food. If there's the least hint you might be violent, they'll bring along armed officers.

Just saying "no" to the IRS is definitely not a very good plan...

[My mom used to be a rev'nooer, so I've plenty of stories about this stuff.]

"Surrender to $FEDERAL_AGENCY the sum of 100,000 bitcoins or go to jail."

"No. You can't make me."

"Wow, that's certainly a retort which our legal system does not deal with several hundred thousand times a year."

I think the problem here is, how would a $FEDERAL_AGENCY know how much bitcoins does one have? The 'no' may come at a point when they ask this question and it may come in the form of "I don't have any, now go and prove otherwise".

In approximately the same way they'd know how much money, dope, or shares of Toyota you have: by asking other people you did business with, counting it, convincing you to accept it from them, or otherwise bringing the routine practice of law enforcement to bear against you.

What stops someone from creating a legal business entity in another country with excellent tax laws and simply managing all business transactions for that entity in Bitcoin. At that point the Bitcoin is not an asset of yours, but an asset of that legal entity. Obviously, when you repatriate that money or that entity buys something for you (because you control it), then you would have to pay taxes on the cash value of what was purchased for you. However for every other traditionally tax intermediate transaction, what can the government really do?

The fact that bitcoin is extranational must open up a lot of completely legal loopholes for avoiding taxes on everything except when you repatriate money in one form or another.

What stops them doing this with any other currency? The point here is that Bitcoin isn't really special.

The fact that you get to completely avoid the US banking system or any other national banking system. Bitcoin can operate 100% extra-nationally.

Let's say person A registers a company in country X but live in country Y and person B also registers a company in country X, but also lives in country Y. Now person A can control the business of his company to do business with the company of person B without ever triggering a taxable event for either person A or B in country Y, until either A or B try to repatriate the money into country Y, at which time it is taxed as income.

How is that significant, though? The fact that the money isn't in any specific national banking system doesn't change the laws that you and your business are subject to unless you happen to find a country whose laws only care about property that's in the banking system.

It's significant for every type of business that transacts in services that don't necessarily require repatriation until distribution of profits. All purchases and sales of services occurring between two "extra-national" corporate entities are essentially tax free. Only when profits and wages are distributed to individuals would taxes be levied.

> The fact that bitcoin is extranational must open up a lot of completely legal loopholes for avoiding taxes on everything except when you repatriate money in one form or another.

I don't see why being "extranational" would do this, and would find this argument much more convincing by pointing to actual loopholes that this applied to.

If it does, and it becomes a problem, those loopholes will be closed.

I'm not even sure that's a problem. When faced with increased cost on their side governments generally just shift that cost back onto the individuals complicating matters for them.

Look at drugs, the government isn't losing much sleep over that, they just add more trials, requisites and regulations that drug companies have to jump in order to bring their products to market.

At any rate, like patio11 said it's no different than trying to trace cash only transactions. The bigger problem with Bitcoin is that since these are electronic transactions they're a bit easier to trace/log and store than those occurring in meat space, as evidenced by the NSA programs and others.

> "If somebody gives up their Bitcoins because they were beaten by a monkey wrench, then we will know that we’ve unequivocally entered a new era."

Doesn't seem quite as far off as it might have before the Snowden situation :(

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