Bloomberg: Law professor, most bitcoiners pay taxes, bitcoin tax evasion not huge issue
University of Florida Law professor talks bitcoins and taxes. He believes most bitcoiners pay taxes and that tax evasion using bitcoins is not a huge issue.
April 14 (Bloomberg) — University of Florida Assistant Law Professor Omri Marian discusses potential tax abuses using Bitcoin. He speaks on Bloomberg Television’s “In The Loop.” (Source: Bloomberg)
How do you use bitcoin as a tax haven?
Bitcoin has all the necessary qualifications for a tax haven.
The jurisdiction does not impose taxes because it is cyberspace.
It maintains the anonymity of taxpayers.
You can use bitcoin to hide your profits from the irs if you choose to do so.
This is how people evade taxes, using bitcoin.
Anyone who has bitcoin right now is not paying taxes on profits?
No, i think most people prefer to comply with tax rules.
But if you choose not to do so, currently there is little the irs can do to come after you.
Is the irs doing anything about it?
The irs is looking into it.
It recently issued guidance that made it clear bitcoin is subject to regular reporting requirements, like any other transaction.
Whether taxpayers to choose to comply is left up to them.
I suspect most will choose to comply.
It is a great weapon in the hands of tax innovators — tax evaders.
It is such a nascent market right now.
If you own bitcoin, do you know how to have it taxed?
Either accounts that know how to calculate the tax thank you are there — other accountants that know how to calculate the tax?
The irs released recent guidance.
The guidance mentioned the queen is treated as property rather than currency.
Every time you dispose of it, you have to account for gains and losses to account for changes in exchange rates.
The rules are there.
There are some issues unresolved.
If taxpayers want to comply with tax rules, even if they use bitcoin, they can.
What is the biggest issue not resolved?
What to do with taxpayers that choose not to comply.
The interesting thing about bitcoin is it is better than offshore bank account because what governments have recently started to do to avoid offshore tax evasion is by shining light by regulating banks.
In the bitcoin world, there are no banks.
It can work without banks.
Beholding and reporting agents are taken out of the picture — the holding and reporting agents are taken out of the picture.
We hope most people would volunteer and pay taxes.
Are there any numbers or guesses as to who may be evading taxes using bitcoin?
Right now, it is not a huge issue because the estimated loss to the treasury every year from offshore tax evasion is up to $70 billion.
The entire bitcoin economy is a few billion dollars.
It might become a major issue as bitcoin becomes more widely adopted.
You have said if most people decide not to pay taxes on bitcoin, that could undermine the credibility of the currency?
In order to become a widely adopted payment system, in needs to have some legitimacy — it needs to have some legitimacy.
People who are enthusiastic about bitcoin should embrace some regulation, not a lot some, to make it legitimate and easily used for people who choose to comply with the law.
If it is just about anonymity, i don’t think it is going to be widely adopted.
As a user, i want to make sure someone enforces the other party obligations.