Will the Bitcoin Become a New Tax Evasion Tool?

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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.

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Published In: Business Organization Updates, Finance & Banking Updates, Government Contracting Updates, Mergers & Acquisitions Updates, Tax Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Joseph Donegan, Scarinci Hollenbeck | Attorney Advertising

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