@FUBAR-BDHR
edited
Tax Reporting & KYC/AML Implications of the IFP Tax?
I've been thinking about the can of worms the IFP could open up if it were to succeed. Originally I was thinking how governments could coerce programmers to add additional taxes that go straight to them. Say the IRS mandating a 34% tax on all mining revenue to be collected and only returned if you could prove you don't have to pay US taxes. Then I thought of something that may be just as bad. Wouldn't all the 8% IFP tax transactions themselves be taxable events? Right now miners may be responsible for income tax on the coinbase reward at the time of payout and/or capital gains at the time of sale of the coins. If they need to transfer 8% of that to another entity they may need to report that to their tax authority resulting in another taxable event. Even worse this may make them be classified as money transmitters and responsible for full KYC/AML on that 8%. Where I live it's something like anything over $500 paid to a single person/organization in a year may require KYC. Who controls the address? What people get the money? What countries are they in? Are there sanctions on that country? Now that last one could be a huge deal. Miner in the US and ABC has an employee in Iran or Venezuela? It may be illegal for you to send that 8% and the only way around that is to not mine that chain. Now imagine sanctions on China. Can of worms opened big time. More like exploded. Did they put any thought into all the regulations/laws this could run afoul of? It seems to me there is quite a bit of research that needs to be done here and I don't see ABC doing it. They will just let it fall on the miners.
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Also, Amaury will have to pay taxes on the 8% he syphons from the network. Depending on who the address belongs to (him or ABC). Either way I can imagine this getting ugly for him if the revenue generated (value at time of mining) is high for a moment until the chain dies. In this scenario, he would owe a shitload of taxes without any way to repay them. gg.
Let's get one thing clear, I'm 100% against the current money grab. That having been said, you are spreading FUD... > If they need to transfer 8% of that to another entity they may need to report that to their tax authority resulting in another taxable event. They don't transfer this money, it goes straight from the coinbase to the IFP address with no interim transaction. There was once a mining pool that distributed funds this way (may still be), so miners actually got their portion of the coinbase reward when the block was generated. This is why it WOULD be a soft fork IF it didn't reject blocks that didn't pay the tax. > It may be illegal for you to send that 8% and the only way around that is to not mine that chain. To the extent that this was a concern, one couldn't mine without the tax, either. Every transaction included in a block is a transaction that might break the same rule. If you support government control of the flow of money, then Bitcoin isn't necessary and any benefit you may perceive after implying said control probably doesn't apply to the majority of persons.
While what you said may be true for one country/state it may not be for others. The miner is doing the work and thus earning the income. If you earn income and it goes to a 3rd party and not to you it may still be reportable and taxable.