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IRS Bitcoin Move will Diminish Value in Related Illegal-Illicit Transacting: UMD-Smith Expert

Mar 26, 2014
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Hot Topic Alert: March 26, 2014
Attention: Economic and financial reporters and editors

Joe Bailey

COLLEGE PARK, Md. - The IRS announcement to treat Bitcoin as taxable property means a new government revenue stream and authority to rein in government-avoiding users of the digital money system, says Joseph Bailey, an electronic commerce expert in the University of Maryland's Robert H. Smith School of Business. 

Bailey, research associate professor of technology, management and policy, is available (at 301-405-2174 or jbailey@rhsmith.umd.edu) to expand on the following, related comments: 

“The IRS position to treat Bitcoin as property is a very important and frankly clever move by the federal government. 

“With this definition, the U.S. government requires all companies and individuals to report on their Bitcoin profits. 

“Not only can the government get taxes on the sale of Bitcoins, it can get a relatively high tax when there are short-term gains undermining the value of Bitcoins for short-term speculation. 

“Furthermore, the individuals and companies who may be living in the Bitcoin ecosystem to avoid government oversight are no longer completely free.  The value of Bitcoins to transact in illicit or illegal activities now is diminished.”

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About the University of Maryland's Robert H. Smith School of Business 

The Robert H. Smith School of Business is an internationally recognized leader in management education and research. One of 12 colleges and schools at the University of Maryland, College Park, the Smith School offers undergraduate, full-time and part-time MBA, executive MBA, online MBA, MS in business, PhD and executive education programs, as well as outreach services to the corporate community. The school offers its degree, custom and certification programs in learning locations in North America and Asia.