The story behind the story of the Las Vegas subpoena for anonymous commenters

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The story behind the story of the Las Vegas subpoena for anonymous commenters

Thursday, June 18th, 2009 | Economics |

You may have heard about this: US feds subpoena names of anonymous web commenters. The comments weren’t just on any story - they were on a particular story involving the IRS prosecution of a man who is a folk hero to the gold bugs.

The case involved Robert Kahre, a Las Vegas businessman who paid his contract employees in gold and silver U.S. coins. The employees then paid taxes based on the face value of the coins, rather than their much greater worth as bullion. The difference can be considerable. A $50 U.S. gold coin contains one troy ounce of gold, which currently fetches over $900.

The IRS sued Kahre and some of his contract employees, essentially claiming that taxes should be based on the actual value of the coins, rather than their face value. Which tends to raise an obvious question. A $50 bill has a real value of essentially nothing since it’s only good for lining a bird cage, so can I get paid in $50 bills and not owe any taxes? (What are you, a Ron Paul supporter? - ed. He’s sounding better and better all the time.)

Employer’s gold, silver payroll standard may bring hard time:

Kahre contends his workers had agreed to be independent contractors, so he did not have to withhold taxes for them. His six businesses are in the trades of painting, drywall, tiling, plumbing, heating-cooling and electrical work.

Further, the $50 gold coins and the silver dollars Kahre used for payroll are designated by Congress as legal tender, so people are entitled to value them at their stamped denominations, he also contends. Taken at face value, each defendant’s annual coin income placed him below the threshold for filing a federal tax return.

Earlier cases on the question of how to value gold or silver coins have focused on collectible coins that had been pulled from circulation but still have value as property, according to the defense. Kahre used coins minted after 1985, which are allowed to circulate.

“It’s not whether what Mr. Kahre did was legal under the law,” defense attorney Michael Kennedy told the jury in his opening statement. “It’s whether he believed what he did was legal,” in the absence of explicit instructions by the IRS — on its Web site, in its publications or in response to written correspondence from Kahre — on how to value post-1985 gold or silver coins.

In 2007 the IRS took Kahre and eight others to court on 161 counts. After four months there were no convictions on any of the charges. Some cases were acquitted. Others resulted in a hung jury. The IRS chose to retry some of the charges and it’s those charges that are currently pending. Coverage of the current prosecution elicited the comments that are now the subject of a subpoena.

Tags: gold

1 Comment to The story behind the story of the Las Vegas subpoena for anonymous commenters

Linoge
June 18, 2009

Huh. Well, if gold and silver coins are not worth what the Treasury Department struck them with, by logical extension, $100 dollar bills are not worth their printed value either.

The IRS is going to have to be very careful with this case…
Linoge´s last blog ..of all the stupid things