When I first heard that the IRS sent out 10,000 letters to crypto holders threatening that they better not evade taxes, I felt like this was a very weak play. I didn't want to say anything until that hunch was confirmed by at least one article that I read. Well, that article is here:
https://news.bitcoin.com/reddit-roasts-the-irs-have-americas-tax-collectors-gone-crypto-fishing/
The throwaway account details the “really bad data” used by the agency, saying they’re operating mostly from guesswork, casting broad nets and leveraging fear to generate revenue.
... affirming that the IRS may be little more than a poorly run “fishing” scam of massive proportions.
The agency famous for long lines and severely understaffed offices, “courtesy disconnects” on the phone, and outdated, enragingly tedious filing procedures is now subject to even further criticism: how in the hell could they possibly deal with a fast-paced technology like crypto, when they can’t even process fiat taxes efficiently?
They’re not really sure if you owe more money or not since they have really bad data. They are almost certainly joining up some of their internal tax filing database tables with external datasets (probably coinbase) and trying to estimate how much they think you owe.
"I have paid 100k’s in taxes on crypto profits over the years. These scare tactics make me want to move to puerto rico 6 months of the year … because i hate playing a guessing game … and spending over a week working on this per year while i am constantly presumed to be guilty."
“It strikes me that this [cryptocurrency] letter writing campaign in particular is very unethical, as they’re blindly scaring thousands of people shitless who very well may have done absolutely nothing wrong. Many of these people will seek legal or professional tax help at a large cost to them … In a fair world they’d [the IRS] face a class action lawsuit for this predatory behavior.”
Conclusion
As artificial scarcity moves away from the physical world and into the digital one (crypto) we are going to see a lot of big changes around the world. People are going to start asking themselves what the state is doing for them to justify these taxes, and every year that goes by that list is going to shrink smaller and smaller.
Blockchain can replace traditional government. Why pay taxes in this archaic way when you can move to a crypto city-state where taxes are paid automatically through inflation?
The equivalence on Steem would be paying 10% to the witnesses. We don't have to think about it; it just happens. This will be the future of paying taxes (simple inflation agreed upon by the community). It will be superior in every way because the money flow will be transparent for all to see. Corruption will have a hard time taking root, especially with hundreds (thousands?) of other crypto cities in healthy "competition" with each other. People will want to live in the cities that have the most evolved governments.
The governments of the world think they can bottleneck this new technology through centralized exchanges in order to track what is going on. It's very obvious to me that this barrier will obviously be broken by a tidal wave of borderless use-cases going forward within the next ten years.
Good luck, IRS! You're going to need it.
What are you trying to tell me? That I can dodge taxes?
No, I'm trying to tell you that when you're ready, you won't have to.
And that's really the rub right there. Crypto is empowering the people and allowing individuals the same rights as banks and corporations. As we all know, megacorps don't really pay much (if any) taxes, and they do so legally. How long until crypto allows the people to do the same?