Quote from: Peter R on March 25, 2014, 09:11:28 PM

Quote from: usabitcoinbuyer on March 25, 2014, 08:57:38 PM

Oh my. What does this mean for bitcoin payment processors like BitPay?

Say I use BTC to buy $1000 in gold from someone who uses BitPay. This exceeds the $600 reporting threshold. As BitPay is doing the BTC->USD conversion, the gold dealer gets paid in cash and has no reporting responsibility. However, in this scenario, I believe BitPay would have a reporting responsibility. Ugh.

This is not correct. I reviewed this with BCB several months ago to be sure. BitPay is a third-party payment processor that facilitates the transaction between buyer and seller. Any obligatory reporting falls on the buyer or seller. For example, there are no reporting requirements when buying a coffee or a TV from Overstock, and the reporting requirements fall on the seller when buying a car from a dealership.

When Goat bought his Lamborghini, he paid via BitPay. BitPay had no requirement to report this transaction, and probably a legal obligation not to. However, the Lamborghini Dealership would have reported the transaction just like how they would report the transaction if Goat had paid via wire transfer or cash.

I wanted to clarify when the $600 rule applies. An example would be if you operated a gold-4-bitcoin shop and used BitPay as a payment processor.

If you only sold $400 of gold via BitPay that year, nothing would happen. However, if you sold $100,000 of gold via BitPay that year, BitPay would be required to report this amount. In no case does BitPay care who your customers are, they just need to keep track of the total funds they transfer to you. Your customers are your business, not BitPay's.

These are the same reporting requirements as for PayPal or Visa.