Yes, I'm sure the IRS has never had to extract wealth from people who don't keep it in a banking account.
> If somebody gives up their Bitcoins because they were beaten by a monkey wrench, then we will know that we’ve unequivocally entered a new era.
I'm… pretty sure they'd just be arrested and placed in federal prison, like any tax evader.
After taking all of your stuff to pay the taxes (and fines) of course.
And yeah, the IRS is very, very, experienced at extracting everything they can from people who hide their money.
If you're employed, they'll garnish your wages. If you're not employed or are "secretly" employed, they'll show up at your house/business (and they know the usual tricks people do to avoid them) and essentially start taking stuff until they think the bill is paid. They'll take your car. They'll take your furniture. If you're a restaurant, they'll clear out your cash register, take your equipment, and take all your food. If there's the least hint you might be violent, they'll bring along armed officers.
Just saying "no" to the IRS is definitely not a very good plan...
[My mom used to be a rev'nooer, so I've plenty of stories about this stuff.]
bitcoin income is taxable income.
"No. You can't make me."
"Wow, that's certainly a retort which our legal system does not deal with several hundred thousand times a year."
Look at drugs, the government isn't losing much sleep over that, they just add more trials, requisites and regulations that drug companies have to jump in order to bring their products to market.
At any rate, like patio11 said it's no different than trying to trace cash only transactions. The bigger problem with Bitcoin is that since these are electronic transactions they're a bit easier to trace/log and store than those occurring in meat space, as evidenced by the NSA programs and others.
Doesn't seem quite as far off as it might have before the Snowden situation :(
