Ever heard of Civil Obedience?...
Actually no, I've always paid more attention to the other side.
Civil Obedience?
At least I learned something new today.
With the help of computers, will BTC Civil Obedience actually burden the IRS enough to make a difference?
This will depend on how popular BTC becomes. If a significant number of Americans each submit a few hundred or even thousand capital gains transactions each for relatively small amounts it will have an impact. Contrary to popular assumptions tax agencies do not have unlimited funds and their mandate is to raise money for the state not spend it. If the paperwork burden gets bad enough where there is no significant return in taxes collected, they will change the rules to something more sensible where there is a threshold below which transactions are not reportable as is the case with foreign currency.
By the way I live in Canada and the CRA is doing a similar thing. They will learn just give them some time. It is interesting to see some tax agencies in Europe backtrack on VAT and BTC. The UK comes to mind here. In the meantime I am for tracking every satoshi and do not forget to claim those BTC network fees.
It's no different then Schedule D for stock buys/sales.
There's people who submit Schedule D forms THOUSANDS of pages long. Nobody actually looks at the individual lines unless they suspect something's wrong with it.
I've personally submitted a schedule D form 10+ pages long. It was auto generated by my broker. The IRS doesn't look at each line, they only look at the total (which I'm responsible for calculating).
That's right. I guess no one here actually realizes that auditing is a very small percentage of what the IRS does. I think it's like 5-7% of the returns are audited. If you fill out these ridiculously long forms hoping that a human is going to read it then you're killing a tree for no reason.
They added a bunch more employees to transition the Obamacare program and when that's running smooth they can start digging into auditing Bitcoin returns with those extra employees. If they don't find anything irregular within the first few years then no one will ever read those Bitcoin returns again. They will just accept the bottom line you entered and file it away. You will be the only one inconvenienced by the extra work.
Yeah, it's more like
"Yep, the required paperwork is here" *checks it off the list*
If you DON'T file the required paperwork, there's a high chance you get flagged for audit as a result, THEN they'll start looking at individual line items.