Will the Bitcoin Become a New Tax Evasion Tool?
by Joseph M. Donegan on August 19, 2013
Bitcoins, a controversial but highly popular global digital currency, is being used by more
consumers to make several types of transactions. Although no government has
recognized the bitcoin as a legitimate currency or placed concrete value on its use, the
anonymity afforded to bitcoin users, coupled with the growing trend of bartering them for assets that carry value, has drawn attention to the currency as a potential tax evasion tool.
A recent Yahoo analysis noted that "money" is not necessarily defined by production or
recognition and distribution by a government agency. Instead, the article argued that
money is typically defined as any tool that can enable financial transactions. Under this
expanded definition, the ubiquitous bitcoin may qualify, namely because it has and
continues to be used to transact real property, foreign currencies, barter, and financial
instruments. Whether this argument will hold up in a legal atmosphere is still
undetermined, but federal authorities - including the Internal Revenue Service - are
weighing these arguments carefully.