Who needs a Cayman account when you’ve got Bitcoin? - Graves investigating IRS small-business letters

WHO NEEDS A CAYMAN ACCOUNT WHEN YOU’VE GOT BITCOIN? The US has been leading a global movement to crack down on tax evasion but as our own Lauren French reports, they may not be keeping up with the digital future of tax cheats: Bitcoin. The digital currency has been mocked and maligned by most mainstream economists but it is a growing economic force online. Users don’t need a bank account to begin investing and the currency can be used at a growing number of online retailers.

And that’s what makes it so tricky.


“The problem for government coffers: There’s no mechanism to ensure that people who make money through such digital currency report the income to the Internal Revenue Service,” French reports. “In its fight against tax evasion, the U.S. is largely focused on shining a light into bank accounts held by Americans in other countries. But experts say the rise of Bitcoin, which doesn’t require a bank account, could force the U.S. to rethink its approach.”

Get the rest of the story here: http://politico.pro/1cPNvxq

FIRST IN MORNING TAX: GRAVES INVESTIGATING IRS SMALL-BUSINESS LETTERS. House Small Business Committee Chairman Sam Graves has written a letter to Faris Fink, commissioner of the Small Business and Self Employed division of the IRS with concerns about a new set of letters going out to small business owners. Graves is concerned that the letters associated with the 6050W 1099 third party reporting requirements are confusing and even intimidating for some business owners.

“When my staff met with you and your team you assured us that the IRS is merely seeking additional information, the initial sentence of the notification letter begins, ‘Your gross receipts may have been underreported,’” Graves wrote. “This gives the impression that the IRS is looking for more than just additional information. To the contrary, the letter implies that this is a serious matter that could lead to assessments of additional tax, penalties and interest.”

HAPPY FRIDAY! One week of recess down, four more weeks of Washington calm to go. Keep your eyes open next week for the return of your intrepid Morning Tax maven, Ms. Lauren French. I’m off to spend a nice long weekend in the beautiful northwest corner of Michigan’s big mitten. I’m headed off early Friday morning but please feel free to email me your tax tips and thoughts at [email protected] or tweet me at @kelsey_snell or reach out to Lauren: [email protected]. As always, please follow @ POLITICOPro and @ Morning_Tax.

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NEW POLITICO PODCAST. What baggage is Obama taking to Martha's Vineyard? Rebecca Sinderbrand, Blake Hounshell, Josh Gerstein and James Hohmann on the Vladimir Putin, Edward Snowden and economic issues putting a damper on the president's vacation. http://politi.co/16yiTf5

TAX REFORM HITTING THE WEST COAST. Senate Finance Committee Chairman Max Baucus and House Ways and Means Committee Chairman Dave Camp are taking their tax reform tour to sunny California. The two chairmen announced today that they will be heading to the Silicon Valley for a two-day stop to visit two tech companies, Square Inc. and Intel Corp.

The first stop will be Square Inc. on Monday, Aug. 19 at 3:30 pm. The company provides merchant services that allows individuals and companies to process debit and credit card statements on mobile phones.

The chairmen will then head to the Intel Corporation headquarters on Tuesday, Aug. 20 at 8:45 am. The multinational tech giant created the world's first commercial microprocessor chip in 1971 and currently dominates the global chip market as the largest and highest valued chip maker in the world.

CREDIT UNIONS KEEP UP PRESSURE IN AUGUST. Members of the National Cooperative Business Association CLUSA International released details today of letters sent to members of the Senate Finance and House Ways and Means Committees, pressing for tax reform to retain the tax exemption for credit unions.

"This wise, common sense tax policy enables credit unions to retain their member focus, in contrast to the for-profit orientation of the commercial banking system," the letters read. "Credit unions earn their tax exemption every day, and we strongly endorse continuing its role in strengthening our financial marketplace.”

QUICK LINKS:

— It is a good time for Muni bonds! Barron’s reports that the tax-free bonds are actually producing higher yields than their taxable cousins in the corporate bond arena. Read more. http://on.barrons.com/1cPRw4O

— The folks at the Tax Policy Center have a great breakdown of two recent looks into what it would take to reach deep tax rate cuts. Read more. http://bit.ly/19ew36E

DID YOU KNOW? In honor of the 100 goats currently grazing at the Congressional Cemetery we bring you goat facts! Goats were domesticated by humans about 9,000 years ago, making them one of the first domesticated animals. The largest, most productive dairy goats are called Saanens. They typically weigh 150 pounds or more and the bucks can get up to well over 200 pounds.

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Covering 127 countries, our 1,400 dedicated analysts conduct their work without financial self-interest in the outcome.

Our ratings foster the development and smooth functioning of capital markets. Capital allows businesses to grow, highways and hospitals to be built, and jobs to be created.

Our ratings express our opinion about the likelihood that debt issued by companies and governments will be repaid in full and on time. Our analysts conduct in-depth research, and their ratings are scrutinized before being approved through a committee process.

We continuously update and refine our processes to align with new developments in the marketplace. We’ve taken to heart the lessons learned during the financial crisis, improving the methodologies behind our ratings.

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