Bitcoin blow: U.S. government freezes funds of digital currency

[GG]

It depends on what you're purchasing.

 

Given the existing laws surrounding real estate, and how those transactions are recorded, there is really no way to safely conduct those transactions without reporting it, so a bitcoin transaction would be best if filed in those cases; were one to even make the transaction in bitcoins. The smarter way to proceed would likely to be to convert the bitcoins to cash, so as to continue to conceal bitcoin usage depending on how the bitcoins were aquired, and if the aquisition were reported.

 

For other transactions, such as payment for services, and international shipping; bitcoin serves those needs admirably, were one to desire non-compliance.

 

And one wonders why illicit trade loves bitcoin? Don't you think that facilitating illicit activity is a much larger weight on regulators' scale than the prospect of replacing existing currencies?

[TakeYouToTasker]

And one wonders why illicit trade loves bitcoin? Don't you think that facilitating illicit activity is a much larger weight on regulators' scale than the prospect of replacing existing currencies?

Depends on the "regulator", and the purpose of their position, I would imagine.

[GG]

Depends on the "regulator", and the purpose of their position, I would imagine.

 

Any regulator, especially the Fed's. I guarantee you Janet Yellen is not losing sleep over bitcoin.

[Jauronimo]

Smart money is investing in dogecoin.

 

Wow. Such moneys. Very cryptography. I can buyz drugz. So currency. Wow.

Edited March 11, 2014 by Jauronimo

[John Adams]

But they are beholden to their own country. Bitcoin isn't restrained in that way.

 

It's not a National currency.

 

This denies any government primary ownership, which is all their rules are in place for in the first place.

 

You don't have to like it, but that's exactly what it accomplishes.

 

You keep proving his point.

 

It doesn't matter if you transact business in bitcoins, dollars, or beaver pelts. Income, sales, and other taxes may apply and need to be reported (by law).

 

The fact that bitcoins make it harder to track the transactions doesn't legitimize the law-breaking in not reporting them.

[Jauronimo]

You keep proving his point.

 

It doesn't matter if you transact business in bitcoins, dollars, or beaver pelts. Income, sales, and other taxes may apply and need to be reported (by law).

 

The fact that bitcoins make it harder to track the transactions doesn't legitimize the law-breaking in not reporting them.

Bitcoin transactions couldn't be easier to track. The entire ledger is public information.

[John Adams]

Bitcoin transactions couldn't be easier to track. The entire ledger is public information.

 

Yes. Very easy to see who should be paying taxes on each transaction. Come on.

[OCinBuffalo]

Your method of payment is irrelevant. You still have to provide the information on the 1099 as to how much and to whom you paid. Your contractors are taking a bet that they won't be audited. If they are, they'll have to explain why you said you paid them $x, and they reported $y. You, as an employer have an incentive to keep detailed payment records because you need to deduct expenses. Bitcoin may make it easier for you to send that payment, but nothing else on your end changes.

 

Bitcoin is a good payment mechanism though for people who want to keep the entire transaction under the rug.

Nah..Per diems, actuals, whatever. These contractors file their expenses, as part of their contract. 1099 has nothing to do with this. By being eternally, "on the road", and never doing a job within 1 hour of their "home", they can expense their entire lives, and they can produce expense reports to cover any audit. As long as I am down with this approach....good luck trying to stop it.

 

It's our word against...nobody's. Many consultants, especially partners in the big firms, live this way. The whole thing goes over the fence, and the client is happy to pay "expenses", rather than "payroll", because expenses aren't taxed. Payroll is(how depends on state of course, but, nobody cares, because: expenses)

 

The king of this is my 1st PM. He leaves his bed? $20, not including the car service. He sets foot in an airport? $10. That's each airport. He goes anywhere near a client? $50 on top of per diem or actuals, doesn't matter. Nobdy screws with him, and he does his reports just like we all do. The man essentially finds a way to make $150-200/week in tax free cash, and that's every week.

 

Travel construction workers are even worse. This is the schit that goes down right now. Bitcoin?

 

If I pay them in Bitcoin, nobody knows what I've paid to whom. In fact, I don't even need to put them on my books: who's going to come in an check comments in code for who did what? In a bunch of compressed, compiled JS, that lives on whatever server I say it does, for as long/little as I say it does, world-wide?

[TakeYouToTasker]

Any regulator, especially the Fed's. I guarantee you Janet Yellen is not losing sleep over bitcoin.

I doubt she is either. Were any danger to be real, I doubt, very much, that it would come from the US.

[GG]

If I pay them in Bitcoin, nobody knows what I've paid to whom. In fact, I don't even need to put them on my books: who's going to come in an check comments in code for who did what? In a bunch of compressed, compiled JS, that lives on whatever server I say it does, for as long/little as I say it does, world-wide?

 

You've just described a cash only business, where it's in both parties interest to understate the transaction. Everyone recognizes that the cash economy is greatly understated, and authorities are sort of ok with that only because the RoI is negative relative to the cost of compliance. So if bitcoin simply substitutes the goings on in the cash world, it may make some headway. But, if it starts chipping away at more of legitimate commerce, but people circumvent reporting rules, then you bet there would be a bigger crackdown.

 

Take your case. You're saying that you don't put those guys on your books, and you probably can get away with that. But let's say your sales quintuple next year. Are you telling me that you won't be reporting the additional expenses that went along with 5X in sales? So from a compliance standpoint, those expenses were paid to somebody, and if those expenses get big enough, you better believe that you will be incentivized to have super record keeping, because the tax man will come after you if he thinks that someone is dodging a tax bill, and you are a lot easier to find than 100 programmers scattered around the US.

[OCinBuffalo]

You've just described a cash only business, where it's in both parties interest to understate the transaction. Everyone recognizes that the cash economy is greatly understated, and authorities are sort of ok with that only because the RoI is negative relative to the cost of compliance. So if bitcoin simply substitutes the goings on in the cash world, it may make some headway. But, if it starts chipping away at more of legitimate commerce, but people circumvent reporting rules, then you bet there would be a bigger crackdown.

 

Take your case. You're saying that you don't put those guys on your books, and you probably can get away with that. But let's say your sales quintuple next year. Are you telling me that you won't be reporting the additional expenses that went along with 5X in sales? So from a compliance standpoint, those expenses were paid to somebody, and if those expenses get big enough, you better believe that you will be incentivized to have super record keeping, because the tax man will come after you if he thinks that someone is dodging a tax bill, and you are a lot easier to find than 100 programmers scattered around the US.

There's no way to answer your question without sounding cocky, so, what the hell..

1. The threshold you are looking for is more like ~50x our sales, before we have to start doing some non-trivial adjustments. Therefore, a need for contract programmers, being specifically, and observably tied directly to increased sales? Implausible. I can prove that with a few benchmark tests. So can a lot of other software firms, using the same/similar arguments.

 

Specific to us, our business model requires that ALL core programming work, which is not configuration, or installation, or integration, be off the critical path. Our platform is designed to respond 100% to client needs, so that's both how and why client needs are 100% removed from the core programming. We write our code in our own time, and do it as we know it needs to be done, without the hindrance of external/uninformed/short term opinion. This approach tends to make some very high quality stuff, thus, this is our competitive advantage, but it also means: you can't point to some external input, like increase sales, or stimulus to us, and infer anything.

 

Nah, if someone was to try and use peformance and scalability as you have in this way? Good luck.

 

2. Go after me how? What exactly can they prove? I change the comments section of the code, and now there's no record of anybody ever doing anything...provided I pay both expenses and fee in Bitcoin. How that works today is: you pay the contractor enough $/hr in fee to look plausible, and the rest you pay in "expenses". If you do it right, the net $ going out is less, because the contractor is taking home more $ in expenses, and is therefore happy and willing to charge you less $/hr in fee. But, yeah, you are stuck with the problem of defending that arrangement in terms of proportion, and producing documentation for of all of it. However, as I said: this is already being done today, and we all have our weekly expense report, which is how we document/get away with it.

 

Bitcoin makes the whole thing irrelevant, as the transactions cannot be observed. For us? Bitcoin would make the entire thing simple.

 

3. I'm fairly certain...that every Fortune 500 company in the USA, all of whom employ contractors, and all of whom use the model I've described: could be classified as "legitimate commerce". So, WTF? GG showing his disdain for my profession again?

 

Don't feel bad GG, I had so much disdain for my profession, I quit my cushy. 1% job, and started my own firm.

[GG]

It would be helpful if, for once, you actually read what people write instead of popping your soliloquy on auto play.

[OCinBuffalo]

It would be helpful if, for once, you actually read what people write instead of popping your soliloquy on auto play.

It would helpful if you actaully responded to what people wrote.

 

Do you, in any way, believe you've answered much of anythign here? Other than your "not a currency because I said so" rinse and repeat?

 

You said contract pogramming isn't a legitmate business. That's absurd.

 

We've raised a whole bunch of points, albeit some are edge cases, but, others clearly aren't....but you've painted all of them with the same brush.

 

It's f'ing annoying.

[GG]

It would helpful if you actaully responded to what people wrote.

 

Do you, in any way, believe you've answered much of anythign here? Other than your "not a currency because I said so" rinse and repeat?

 

You said contract pogramming isn't a legitmate business. That's absurd.

 

We've raised a whole bunch of points, albeit some are edge cases, but, others clearly aren't....but you've painted all of them with the same brush.

 

It's f'ing annoying.

 

I'll gladly answer the questions after you show me where I said contract pogramming isn't a legitmate business (sic)

[GG]

Here's a good listen from Freakonomics. Also includes a priceless quote from Krugman, circa 1998.