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The Isaac Brock Society

17 thoughts on “So, this Bitcoin we’re hearing about and trying to understand — what does it mean for IRS, FATCA (as well as taxation within all countries)?”

  2. Thanks, bubblebustin. I likely read it but it didn’t register. I’ll go have a look at that discussion.

  3. @Calagary…

    If the subject of Bitcoins interests you, then I would recommend Planet Moneys coverage….

    The nature of man is to always search for ways to store value. Since value, in my opinion, is not a tangible concrete item, but rather a creation of the mind of man, and it really can be anything. We make up value like we make up religions (I probably should not say that as it might offend some true believers! Sorry.) Gold is the oldest expression, fiat paper currency the most modern, but you can not over look certificates of stock or real estate as also store houses for value until they are not.

    Bitcoin is just the most recent technological expression of our desires to find a way to create something that can not be controlled (inflated or deflated) by government, but like all items man desires/values, it too can inflate. Is it a bubble? Well, I guess you never really know about bubbles except in hindsight, but it has the characteristics of one, if you just use charts as a guide.

    Here is the latest Planet Money podcast, with links to previous stories in 2011 where they explained what a bit coin was and it might fill in some blanks for you.

    BTW, the media player of this story wasn’t working this morning when I tried it, so you may just need to download it with the button provided.

  4. Thanks, Just Me. It’s all an illusion, even what we think is “insured” in our regular bank accounts.

    I’m just trying to imagine how taxation, FATCA or any kind of regulations we now have would keep up with the changes and what the costs of that would be… if the bitcoin or some similar concept takes hold and becomes our future. It’s hard for me at my age to get my head around new concepts.

  5. Just my opinion but Bitcoin appears to be a beta test for the global electronic “currency” envisioned by the New World Order. As you can imagine when the ONLY form of “currency” is digits on a screen then it is oh so easy to zero your digits, disconnect your access to the screen and essentially make you a non-person. You can then only try to survive by bartering (good luck with that) and bartering can be dealt with by making it a criminal offence. BTW, Bitcoin just bubbled up to a record high and then lost 40% of its value. Somebody is playing with its value and making heaps of that other essentially virtual currency called the US dollar.
    http://www.guardian.co.uk/technology/2013/apr/10/bitcoin-new-high-losing-160

    As for FATCA/DATCA/GATCA and Bitcoin or whatever else replaces it, well all the transaction data will be collected by the IRS and its counterparts worldwide so your entire financial life becomes theirs to do with and tax as they please — automatically calculated and debited before you can even make a squeak.

  6. I agree with Just Me’s comments and would add the following:

    One can do three main things with money: (1) use it as a means of exchange for purchasing real goods or services, (2) save it for future use, or (3) speculate in its exchange value. Bitcoin may become useful for the first purpose but, in my view, would be very risky for the other two purposes.

    As a social experiment Bitcoin is an interesting example of how the internet and other new technologies as diverse as cellphones and drones are empowering individuals and non-governmental groups, as well as governments, in new ways. We are in for a long-term struggle over control of people and resources, of which FATCA is only one battle. In that struggle the idea of nation-states secure behind geographic borders seems to be threatened with obsolescence. For us individual people there are correspondingly new questions about freedom, responsibility, safety and loyalty that transcend nationality. I think we are all in for a very rough ride, as people in the Arab world and Europe are already experiencing.

  7. Em, I agree with your comments on the dangers a global electronic currency. For control of money and taxation to become international, however, would require the U.S. to yield a lot of its highly-prized sovereignty, something their politicians will be very unwilling to do. And it’s unlikely that other governments, like that of China, will let the U.S. extend its own financial control further internationally. So, unless there are some very surprising developments in international law, I doubt that there will be a New World Order for money and taxation, including a new international currency (electronic or not), any time soon.

  8. @ AnonAnon
    I hope you are right but I can’t tell you how many things I deemed to be highly unlikely just 5 years ago are now a reality and how many others are “under consideration”. The whole world is whooshing toward a very disturbing place at an ever increasing speed it seems. But hey, it’s Spring, the sun is shining, we still have some freedom … I think.

  11. @Just Me. The day that we ‘spend our money like it grows on trees’ has arrived! Hallelujah!

  14. IRS Could Begin Taxing Bitcoin and Other Virtual Currencies

    The Internal Revenue Service plans to develop more guidance and training materials to inform taxpayers and tax preparers of the tax compliance risks associated with using virtual currencies like Bitcoin and “Linden dollars.”

    A new report from the Government Accountability Office recommended that the IRS develop additional guidance to reduce the tax compliance risks of virtual economies and currencies, such as the type used in online multiplayer games. The GAO report noted that transactions within virtual economies or using virtual currencies could produce taxable income in various ways, depending on the facts and circumstances of each transaction.

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