Scarinci Hollenbeck, LLC
The Firm
201-896-4100 info@sh-law.comFirm Insights
Will the Bitcoin Become a New Tax Evasion Tool?
Author: Scarinci Hollenbeck, LLC
Date: August 19, 2013
Key Contacts
Back
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.
Because bitcoins may be used to facilitate financial transactions, the IRS in particular is focusing on the currency and where it falls in line with federal tax laws. Forbes recently analyzed the use of bitcoins as a potential tax evasion tool, noting that anonymity is one of the key issues that may make avoiding taxes possible for users. In addition, the IRS relies heavily upon financial institutions and foreign governments to report details of account holders for tax purposes. As bitcoins are not recognized as a legitimate currency, users do not have to rely on financial intermediaries to move them or make transactions.
Further, there are several legal questions that remain. For example, if consumers exchange bitcoins for cash, the question of whether there is a “gain” may depend largely on whether bitcoins are viewed as a currency or commodity, Forbes explained. Until these questions are answered, speculation of whether the digital currency will emerge as a tool to avoid taxes – and how this issued will be resolved – may continue to grow.
- Practices: Tax and Trusts & Estates, Blockchain, Cryptocurrency Defense & Investigations, Sophisticated Estate Planning & Wealth Preservation
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
When Are New Jersey Business Owners Personally Liable for Corporate Debt?
New Jersey personal guaranty liability is a critical issue for business owners who regularly sign contracts on behalf of their companies. A recent New Jersey Supreme Court decision provides valuable guidance on when a business owner can be held personally responsible for a company’s debt. Under the Court’s decision in Extech Building Materials, Inc. v. […]
Author: Charles H. Friedrich
Commercial Real Estate Trends to Watch in 2026
Commercial real estate trends in 2026 are being shaped by shifting economic conditions, technological innovation, and evolving tenant demands. As the market adjusts to changing interest rates, capital flows, and workplace models, investors, owners, tenants, and developers must understand how these trends are influencing opportunities and risk in the year ahead. Overall Outlook for Commercial […]
Author: Michael J. Willner
One Big Beautiful Bill: New Tip Income Tax Rules Employers & Workers Need to Know
Part 2 – Tips Excluded from Income Certain employees and independent contractors may be eligible to deduct tips from their income for tax years 2025 through 2028 under provisions included in the One Big Beautiful Bill. The deduction is capped at $25,000 per year and begins to phase out at $150,000 of modified adjusted gross […]
Author: Scott H. Novak
One Big Beautiful Bill: New Overtime Tax Rules Employers and Employees Need to Know
Part 1 – Overtime Pay and Income Tax Treatment Overview This Firm Insights post summarizes one provision of the “One Big Beautiful Bill” related to the tax treatment of overtime compensation and related employer wage reporting obligations. Overtime Pay and Employee Tax Treatment The Fair Labor Standards Act (FLSA) generally requires that overtime be paid […]
Author: Scott H. Novak
New York’s FAIR Business Practices Act: What the New Consumer Protection Measure Means for Your Business
In 2025, New York enacted one of the most consequential updates to its consumer protection framework in decades. The Fostering Affordability and Integrity through Reasonable Business Practices Act (FAIR Act) significantly expands the scope and strength of New York’s long-standing consumer protection statute, General Business Law § 349, and alters the compliance landscape for New York […]
Author: Dan Brecher
How to Reduce Legal Risk as Your New Jersey Business Grows in 2026
For many New Jersey businesses, growth is a primary objective for the New Year. However, it is important to recognize that growth involves both opportunity and risk. For example, business expansion often results in complex contracts, an increased workforce, new regulatory requirements, and heightened exposure to disputes. Without proactive planning, even routine growth can lead […]
Author: Ken Hollenbeck
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.