Taxes

IRS Authorized To Summon Kraken For User Information

06/05/2021 by Idelto Editor

The IRS has been authorized to seek information on users of the cryptocurrency exchange Kraken, to ensure they are paying their taxes.

A court in Northern California has empowered the IRS to serve a “John Doe summons” to Payward Ventures Inc., which does business in the U.S. as cryptocurrency exchange Kraken, as it seeks information about user transactions with tax implications.

Per this summons, the exchange could be compelled to provide information on users who might have conducted transactions worth at least $20,000 between 2016 and 2020. Notably, this summon does not imply that Kraken is suspected of any wrongdoing.

“This John Doe summons is part of our effort to uncover those who are trying to skirt reporting and avoid paying their fair share,” IRS Commissioner Chuck Rettig said in a U.S. Department of Justice (DOJ) press release.

“Gathering the information in the summons approved today is an important step to ensure cryptocurrency owners are following the tax laws,” added acting assistant attorney general David Hubbert of the DOJ’s Tax Division. “Those who transact with cryptocurrency must meet their tax obligations like any other taxpayer.”

The IRS uses the John Doe summon to get details l about taxpayers from agencies or exchanges within the country for those it does not yet know the names of. This move on the part of the government, to gather more information about bitcoin users and compel them to follow regulations, highlights one of the primary reasons many have sought an alternative to the conventional financial system.

In the last 24 hours, bitcoin has been the highest-volume cryptocurrency traded on Kraken, with more than $430 million worth.

Report: Biden Seeking To Nearly Double Capital Gains Taxes For Wealthy Americans

27/04/2021 by Idelto Editor

Report: Biden Seeking To Nearly Double Capital Gains Taxes For Wealthy Americans

President Joe Biden is considering raising the U.S. capital gains tax rate by nearly double for the wealthiest Americans to pay for agenda items, according to Newsweek. Naturally, any raise in capital gains taxes would have significant impact on bitcoin investors that have seen the value of their assets rise exponentially in recent years.

According to Newsweek, the tax increase seeks to help fund Biden’s American Families Plan, a proposal set to be finalized and presented sometime this week. It aims to allocate “$1.5 trillion in new spending and tax credits meant to fight poverty, reduce child care costs for families, make prekindergarten and community college free to all, and establish a national paid leave program,” reported The New York Times.

An analysis recently published by the Tax Foundation further analyzed how the new federal tax rates could play out at the state level. It shows that “[rates] would be even higher in many U.S. states due to state and local capital gains taxes, leading to a combined average rate of 48 percent compared to about 29 percent under current law.”

If enacted, “Biden’s plan would be the highest tax rate on investment gains since the 1920s,” per Newsweek.

Naturally, such a high capital gains tax rate would influence taxpayers’ decisions regarding when to sell their assets and in which state they choose to live. According to the Tax Foundation, if enough taxpayers decide not to realize gains and avoid the new tax rate, Biden’s move could backfire, resulting in less federal revenue altogether.

Although traditional investors might avoid the tax increase for some time, Bitcoiners are in a unique position. They might see Biden’s potential plan as the ultimate incentive for not selling their bitcoin and not realizing any capital gains.

Already accustomed to the “HODL” motto, Bitcoiners would be more incentivized than ever to hold on to their bitcoin until hyperbitcoinization, at which point the IRS would cease to exist as the USD is replaced by a Bitcoin standard. And, until then, if they ever need some dollars, they can loan a small portion of their bitcoin stack for a fee, rather than selling it and incurring tax obligations.

Tax Authority Seizes Cryptocurrencies Worth $25 Million From Hundreds of Crypto Investors in South Korea

24/04/2021 by Idelto Editor

The tax department of the Seoul metropolitan government in South Korea has reportedly seized cryptocurrencies worth about $25 million from hundreds of crypto investors with delinquent taxes. The cryptocurrencies, including bitcoin, were seized from three exchanges. The tax authority is now going after hundreds more taxpayers who are delinquent on paying their taxes.

Crypto Seizure for Tax Payments

The Seoul metropolitan government announced Friday that it has seized cryptocurrencies from hundreds of individuals who are delinquent on their tax payments, Yonhap reported.

Cryptocurrencies belonging to 1,566 individuals, including heads of companies, have been identified by the city government’s tax collection department at three cryptocurrency exchanges. So far, the tax authority has seized the coins from 676 people who owe the government 28.4 billion won (approximately $25.47 million) in overdue taxes. It will soon go after the crypto assets of the other 890 people.

Since the crypto seizure, 118 taxpayers have paid back 1.26 billion won, the city government said, elaborating:

We are continually being asked by delinquent taxpayers to refrain from selling their cryptocurrencies as they will pay their taxes.

“We believe the taxpayers expect the value of their cryptocurrencies to increase further due to the recent spike in the price of cryptocurrencies and have determined they will gain more from paying their delinquent taxes and having the seizure released,” the government described.

The city government gave an example of the head of a hospital whose cryptocurrencies were confiscated. He asked the authorities not to sell his coins and immediately paid 580 million won out of the 1 billion won he owed in unpaid taxes and provided security for the rest.

Similarly, another taxpayer asked the government not to sell his seize cryptocurrencies worth 3 million won, pleading that in two years, their value will grow substantially and will more than cover his delinquent tax of 20 million won.

According to the tax authority, the most popular cryptocurrency among delinquent taxpayers is bitcoin (19%), followed by Dragonvein and XRP, both at 16%. The next most popular crypto is ethereum (10%) and then stellar (9%).

What do you think about the local South Korean tax authority seizing cryptocurrencies for tax payments? Let us know in the comments section below.

Miami-Dade Officials Hope to Launch a Crypto Task Force, Residents Could Pay Taxes in Bitcoin Soon

17/04/2021 by Idelto Editor

Back in mid-February, Bitcoin.com News reported on Miami’s Mayor Francis Suarez supporting the idea of the city holding bitcoin in the treasury and allowing tax payments in bitcoin as well. On April 15, 2021, reports show that the city may introduce the tax payments concept soon, as the District 8 county commissioner Danielle Cohen Higgins has pushed for the invocation of a Miami-Dade digital currency task force.

A Resolution for a Cryptocurrency Task Force Has Been Submitted to an Infrastructure Committee in Miami-Dade

A few years ago at The North American Bitcoin Conference (TNABC) in Miami, Mayor Francis Suarez told the audience that he wanted the city to become a cryptocurrency and blockchain hub for innovation. Later, as digital currencies have seen fresh new price highs in 2021, Suarez has pushed for the city to hold bitcoin (BTC) in the treasury and wants to allow tax payments in BTC as well. At the time the city commissioners voted in support for the crypto infrastructure and holding the leading crypto asset in the state’s treasury as well.

Now the ability to pay Miami-Dade taxes may come to fruition in the near future. District 8 county commissioner Danielle Cohen Higgins told the news publication Miami New Times a resolution has been submitted to the city Infrastructure, Operations, and Innovations Committee. Miami New Times’ report shows the resolution hopes to invoke a 13-member cryptocurrency task force dedicated to addressing the solutions at hand. Once the group is formed they will examine the idea of residents paying taxes with bitcoin.

“The item would establish a task force that could delve into the feasibility of using cryptocurrency in Miami-Dade County, to explore any potential benefits and pitfalls that could result from its use. It is important to explore all avenues that can support an expanding tech and startup presence to benefit our economy,” Cohen Higgins said in an interview.

District 8 County Commissioner Hopes for a Tech Boom to Root Itself in South Miami-Dade County

Suarez has been trying to attract the technology industry to come to Miami for years and many business moguls from places like Silicon Valley have taken him up on his offer. “Visiting Miami right now and I think I’ve seen more people from SF here than I saw in SF last year,” the cofounder of Ibuying startup Opendoor, JD Ross tweeted on January 10. The city is also home to a bustling crypto community, conferences like TNABC, and bitcoin ATMs across the city.

District 8 county commissioner Cohen Higgins has explained that a tech boom in Miami would be welcomed. The cryptocurrency task force will need to get approval from the full county commission in order to move forward with these concepts. “I would love for the tech boom that’s already underway to root itself in South Miami-Dade County,” Cohen Higgins concluded. “I would love for them to consider us and for us to have a seat at the table. If we were to have a tech or innovation park [in South Dade], that would be really helpful,” she added.

What do you think about Miami looking to introduce bitcoin acceptance for taxes? Let us know what you think about this subject in the comments section below.

Miami-Dade County Could Soon Let Residents Pay Taxes With Bitcoin

16/04/2021 by Idelto Editor

A Miami-Dade County commissioner is exploring the feasibility of residents paying their taxes and fees in bitcoin and other cryptocurrencies.

Danielle Cohen Higgins, District 8 County’s commissioner and representative on the Miami-Dade Board of County Commissioners, is putting forth a resolution for establishing a cryptocurrency task force that would assess the feasibility of allowing residents to pay for county taxes, fees and services with bitcoin and other cryptocurrencies.

The goal, Cohen Higgins told Miami News Times, is to get Miami-Dade County a step ahead of the other counties in the U.S.

The proposal comes amid a growing trend in Miami of attempting to bring Bitcoin integration to the city’s services. Mayor Francis Suarez has been vocal about exploring how Bitcoin and other cryptocurrencies can help propel Miami forward in the technological development landscape.

Cohen Higgins told Miami News Times that “she has been inspired by Suarez’s embrace of tech innovation and wants to support his efforts at the county level by exploring cryptocurrency’s use for municipal government.”

Mayor Suarez’s resolution to explore using bitcoin for the compensation of city employees and allowing residents to pay city fees and property taxes in bitcoin got approved in February.

With residents and investors of different backgrounds and nationalities, the city of Miami would benefit from one aspect of bitcoin which other cities may disregard: government neutrality. Bitcoin would allow foreign investors to make payments without the losses typically incurred by exchange rates and fees. This can save both the city and the taxpayer time, effort and money.

Apart from the governmental contributions, 2021 will be a great year for Miami and its Bitcoin community, as the largest Bitcoin event of all time got relocated to the city. Moreover, this sort of Bitcoin development and discussion also benefits the network, as it pushes bitcoin to become a more widely-accepted, trustless medium of exchange. Having counties and governments explore this aspect of Bitcoin may aid its adoption across other areas of society as well.