1. The obvious, that they are collecting funds on behalf of other people's work and then keeping them when the funds go 'unclaimed'
2. Even if you do want to claim it, they don't make it easy, and for someone in a complicated tax country (like the author, Austria) there is almost no way he could accept the money without incurring some kind of risk. So basically when they are keeping money that goes unclaimed it's very problematic because they don't make the money easy to claim in the first place. Obvious incentives issues.
I'm not sure it is. I'm not a huge fan of tip4commit either, I agree that it's opt-out model is bogus, but the fact that it uses Bitcoin seems irrelevant.
The author seems to believe he cannot accept tips, because of tax and regulation, but he doesn't point out what specifically would cause problems here. Obviously people make and accept tips using euros all the time, this is not illegal, so why it would be different using Bitcoin isn't obvious. You can declare tips as income, no problem.
The real cause of his discomfort is revealed later in the post:
Personally I believe that Bitcoin is a terrible currency ... If you have a completely broken piece of country then I can imagine that you are suspicious of regulation and this sort of thing, but for me regulation is what keeps my world running and working.
Also,
Bitcoin for me feels like a cult. The vocal people in the community seem like they don't actually care about Bitcoin, but they want to see it succeed so that their "investment" makes a profit
So he has a generalised feeling that Bitcoin is bad because it's popular and has vocal fans, and that regulation is good yet also complicated, so anything which seems simple must be unregulated and therefore bad.
I do not consider myself particularly libertarian, though I do use and work on Bitcoin. Regardless, this doesn't seem like a great set of arguments. Rather, the author has decided that because a lot of Bitcoin users don't seem to like government, and he likes government, he should not like Bitcoin.
> author seems to believe he cannot accept tips, because of tax and regulation, but he doesn't point out what specifically would cause problems here.
JFTR: "accepting tips" for software is something that is not at all straightforward. The way bountysource and others get around that is through invoices once a large enough amount has accumulated. I have no idea how that works in other countries. Gratipay/bountysource solve this problem, no bitcoin service I have seen does.
> Rather, the author has decided that because a lot of Bitcoin users don't seem to like government, and he likes government, he should not like Bitcoin.
I think you misunderstand something there: I am pointing out why Bitcoin is something that does not solve problems for me and I doubt I am the only one. The premise of tip4commit is that it helps Open Source projects. It's not just not helping me, it's making my life more complicated. In fact, right now, pretty much anything that has bitcoin involved makes it harder for me.
Could you explain why accepting tips is so complicated? What specific law means you cannot do it?
Let me put this another way. If your friends give you money for your birthday, do you give it back to them and tell them you can't accept their gift because of tax and regulation? I doubt it! You may well declare the gifts on your tax return if it's big enough to bother with, but if Austria makes it hard to accept cash gifts of small amounts then something is seriously wrong with Austrian law and this is not something to be defended.
1) In many countries, unlike USA, a majority of people don't ever handle a "tax return" or "file taxes" - if your income consists of standard salaries or student stipends or social security/etc, then the employer is required to handle everything and you can generally ignore the issue unless you start doing business or selling real estate or whatever. For a normal person, the cost of starting to file taxes (and investigating how it needs to be done) it's orders of magnitude larger than any reasonable amount of tips - generally, hiring an accountant would be cheaper&safer than doing it yourself and any non-standard income less than the accountant fee is not worth the hassle.
2) Those tips are strictly different from personal gifts - they're payment (voluntary, but still) for stuff you did, so tax wise, they would be considered equivalent to commercial export of software. Taxes on international commerce are tricky (e.g., determining if value added tax applies in this case, etc), most jurisdictions have some simplified paperwork, guides and assistance for small business with the expectation that they're domestic, not international.
3) If you're asking "which specific law prohibits" - it's entirely opposite, it's not like there are specific laws for each taxable thing - the general law mandates that any and all income is declarable and taxable, and then there are specific laws to make exceptions for things such as birthday gifts from relatives or tips for waiters.
Generic endorsement of this comment, coming from someone who has an international business and has occasionally had to decline tips, for these (and other [+]) reasons.
I once had a gentleman attempt to put a rather small sum of money in my hand. Call it $50. He meant it as a nice gesture, because he had been consuming my professional output for years, and it had helped his business. He could not have known, but causing me to have US-source income would have potentially exposed me to several thousand dollars in additional tax liability during that year. (Long story.) There exist ways around it, but at the very least I would have had to loop my accountant in on the incident, so we could discuss whether I have to worry about the $50 "donation."
My accountant's rate is $10. Per minute.
All of this was going through my head when I attempted to gracefully decline.
[+] Totally separate from tax/compliance, I have social reasons why I prefer to not get tipped for things. Social expectations are a weird thing, but regardless of their intrinsic weirdness they appear to be real, and as a result I try to hew to them unless I have a really strong reason to not to. One feature of social classes in the US is that the one I aspire to be in does not accept tips. Tips are something which flow from the relatively well-off to the relatively poorly-off, and even in those relationships where I'm relatively poorly-off, lumping myself in with waiters and massage therapists doesn't sound advantageous when I hope to have a professional image closer to that of a doctor, lawyer, or investment advisor.
For related reasons, I remain very concerned that many OSS developers appear to think that they should have to throw hundreds of hours of professional labor into projects used by for-profit companies so that they can be allowed to participate in Internet busking on a scale which would be sneered at by actual buskers.
> Could you explain why accepting tips is so complicated? What specific law means you cannot do it?
If tips come in individually and in small numbers and you need to track the rate of exchange, origin and everything the money I lose money actively by needing to track it. There is no point in accepting small amounts.
The reason actual tips work in Austria is because they are tax except within a regulatory framework. That however does not apply to software developers.
> Let me put this another way. If your friends give you money for your birthday, do you give it back to them and tell them you can't accept their gift because of tax and regulation?
Actual gifts are a different tax code (they are tax free). I can however not just pretend that any of my income is the same. This is not a "but if i read the law like this" thing.
> but if Austria makes it hard to accept cash gifts of small amounts then something is seriously wrong with Austrian law and this is not something to be defended.
From what I have heard it's not in any way easier in other countries and it does not have to be because that was never the problem. The whole point of bountysource and other systems is to accumulate money and to simplify the whole process. It makes everything easier, even if taxes would not be concerned. It's what makes the whole tipping thing save and easy through a middleman.
> Could you explain why accepting tips is so complicated? What specific law means you cannot do it?
I can't speak for the OP and the GP, but I can shed some light on this for which problems I could run into in germany:
* I own a company (GmbH, limited liability). Bookkeeping rules are fairly strict, I can't accept random money from random people without having an entry in a ledger. It's possible, but if it's single digits then it's probably more work than it's worth. I'd also have to figure out how to legally accept money from the US or whatever country this money comes from.
* I could accept the money as private person. Then I'd still have to keep books and add that to my private income. That probably would also be more work than the attached payoff.
* Not keeping books or declaring the donations may draw the scrutiny of the tax authorities. If you're accepting a lot of small cash gifts you might also run afoul of money laundering regulations.
> Let me put this another way. If your friends give you money for your birthday, do you give it back to them and tell them you can't accept their gift because of tax and regulation?
Gifts from friends and family are specifically exempt from income tax regulations, so you're attacking a strawman here.
Even supposing something was seriously wrong with Austrian law, it's a little presumptuous to expect everyone affected to try to fight that. Maybe they're already under careful watch by the national tax agency after getting audited because of some honest mistake the past year. Maybe they're under probation under a law you and I would call unjust, but triggering further law-enforcement attention lands them in jail regardless of whether they were justified. (This scenario happens a lot in America, incidentally.)
If someone says "I want to stay out of this", that should be their right.
You may have good intentions, but continually asking questions like "What specific law means you cannot do it?" (even politely) is still kind of rude. Who cares why he doesn't want tips; it's his call to make.
But the article I'm responding to doesn't just say "I don't want tips, thanks", it's a long blog post that states quite clearly the author believes nobody can accept tips this way, that Bitcoin is useless, that anyone who doesn't love paperwork must live in a broken country, etc. It's not a simple position statement, it's quite the polemic! Meanwhile, lots of people are tipping each other apparently without problems.
Given this state of affairs, it seems a reasonable question to ask. After all, that's what this web page is for - discussing the blog post.
First let's get some perspective on the sums involved. One of the tip4commit spams I got after a commit informed me that my tip balance was 0.00000171 BTC. At current exchange rate this is equivalent in US dollars to $0.0005525523.
In other words, at a rate like that, it requires nearly two thousand tips just to add up to a single US dollar worth of tips.
And it gets worse. Remember that tip4commit "refunds" the tip back into the project pool if it's not claimed within 30 days. So just to get money out of this, you have to be making enough in tips, every 30 days, to overcome the cost in both time and potentially transaction fees of claiming the tips.
And then you have to do a bit more figuring to see if the money you'll get once cashed out is enough to justify the bookkeeping cost it imposes on you; after all, now that's income that you need to keep records of and figure into your taxes, which is not a zero-cost thing.
So first of all, you need to figure out the expected amount of tips, both over rolling 30-day periods and over the course of a year, which again is not a zero-cost thing, since if nothing else it involves spending time, and calculate whether they are enough to overcome the friction of getting the money out of tip4commit and then the cost of keeping records of and reporting it.
It is highly unlikely at this time that any person will be earning enough in tips from tip4commit to reach the point at which it becomes profitable even to the tune of a few units of local currency. A final data point for this: tip4commit states that it tips out at 1% of the balance of the project on each commit. Its attempt to tip me 0.00000171 BTC was for a commit on Django, which means the balance of donations for Django at that time was 0.000171 BTC, which simply cannot be enough to make it worth while for any person who contributes code to Django. And I don't rate it likely that there are a bunch of other projects with balances significantly larger, which means it is probable that there is currently no individual developer in the world for whom accepting tips from tip4commit is a profitable activity.
And that's without getting into the problems associated with the site displaying your name in tipping lists even if you never accept them, or the problems associated with displaying projects -- quite a few large open-source projects have associated non-profit foundations, and are bound by law regarding donations made for specific directed purposes. Although you can argue it's unlikely any person or organization would ever actually be punished based on tip4commit listing them, it certainly is possible that they could be called upon to prove that they are unaffiliated with tip4commit and refuse to accept the tips. Which, once again, is not zero-cost; now it potentially costs individuals and projects time and/or money for something they had no control over because tip4commit "opted" them in forcibly and continues to drag its feet on opt-out.
All in all, this is a mess. It probably should just shut down, but if it stays operating it's going to keep getting heat, and will keep deserving it, until it switches to being based only on explicit opt-in.
There are some projects that got much more donations and users that got more tips. You can check the list https://tip4commit.com/users It was a mistake to bother you with this tiny tips. Sorry
Also, if you claim your tips by specifying your bitcoin address, tips will never be refunded again.
> The author seems to believe he cannot accept tips, because of tax and regulation, but he doesn't point out what specifically would cause problems here.
I'm in the US, not Austria, but from what little I've seen of even the US's legal and tax system, doing something with money that you don't fully understand is a risk. I am glad that there are people who are willing to take that risk in the name of improving society, and pioneer the use of Bitcoin and other alternative currencies.
But nobody should be obligated to take that risk if they don't want to. I would be completely unsurprised if some emergent behavior between the US tax code and other laws meant that if you were merely aware of people accepting tips on your behalf using your name, even if you didn't ask them to, there are tax or legal obligations. I would be completely unsurprised if the law says, if you ask them to stop and they don't, you're _obligated_ to initiate legal process to make them stop. I don't think the law says that, but it's certainly way less crazy than lots of funny corners of US tax and commerce law.
I would also be completely unsurprised if US tax code got complicated when you're accepting Bitcoin as payment. I'm dimly aware that the IRS or FinCEN or someone issued guidance recently that Bitcoin doesn't count as a currency but instead counts as a something-else... and not being a cryptocurrency user, I haven't bothered to learn what that something-else is and how you're supposed to report taxes on it.
If someone is willing to figure out how the law works, or pay their lawyer to, more power to them. But nobody should be _obligated_ to.
This may have changed in the last 24 hours, but last I checked tip4commit's opt-out model is "get stuffed". The original controversy was over their refusal to remove projects from the site on request.
I agree that Bitcoin is more or less irrelevant to the controversy, but like the OP says, the tip4commit defenders seem to have intentionally made it a pro/anti-Bitcoin conflict. Bitcoin advocates were mobilized to support the site.
> The author seems to believe he cannot accept tips, because of tax and regulation, but he doesn't point out what specifically would cause problems here.
I should think that would be pretty obvious. Go ahead and try collecting regular currency for a charity of your choice without ever getting sign off from that charity and only ever giving them the proceeds if they ask. It will end very badly for you.
> You can declare tips as income, no problem.
No, there are a lot of potential problems that stem from this. In particular, it raises lots of flags about whether those tips are accurate, whether it is some form of money laundering, and whether they are really tips or something more nefarious. Unlike in the US, in a lot of other 1st world countries, handling taxes is incredibly straightforward (less than an hour of your time a year and zero risk of liability), but once you throw tips in to the equation now it's as difficult as it is for many people in the US.
> So he has a generalised feeling that Bitcoin is bad because it's popular and has vocal fans, and that regulation is good yet also complicated, so anything which seems simple must be unregulated and therefore bad.
No, he's pointing out that its vocal fans have a distorted perspective and often don't really buy in to its virtues... but those problems are not why Bitcoin is a terrible currency.
> The author seems to believe he cannot accept tips, because of tax and regulation
That's not what he said. He said that he doesn't want to deal with a system for accepting tips if the cost to him of the system (not just in money but in time and effort) is greater than the benefit. He mentioned two tipping systems (gratipay and bountysource) that, to him, don't have this problem.
It is very far from simple anywhere, especially in the US: It isn't perfectly clear if you should treat bitcoins as commodity or currency. See [0] for more details.
As a general rule, if anyone tells me "but taxes aren't complicated" or "but what's the complication", I know they are talking from ideals and not experience.
The Federal US tax code, last time I looked at it (2009) was over 71,000 pages (add a few more thousands per state). It doesn't get shorter with time. Of those, "only" 20,000 or so apply to every individual (not the same 20,000). Other countries are better, but the shortest country tax code I've had the pleasure (?) of dealing with was only 4,000 pages of printed text.
Intrastate/intracountry transactions are usually complicated, but somewhat tractable. Cross-border transactions are usually ill-specified, can be classified in multitude of ways all technically legal - and yet, if the tax authorities in either country things you've done it wrong, you are assumed guilty until proven innocent.
Anyone who is not scared of the tax code has not had to wrestle it. You may win some battles after working hard. But you never want to go into this war.
> So he has a generalised feeling that Bitcoin is bad because it's popular and has vocal fans, and that regulation is good yet also complicated, so anything which seems simple must be unregulated and therefore bad.
The only (or at least, the main) argument we ever hear in favor of Bitcoin is that it's unregulated, and therefore it's liked by people who dislike regulation. Why, then, is it surprising or illogical for someone to dislike Bitcoin because they're in favor of regulation? Being in favor, or against, regulation is a matter of personal political opinion, and that, in turn, shapes one's opinion of Bitcoin. This argument makes just as much sense as those for Bitcoin.
The way I read it, the GP mocks the idea that a self-regulated system would be unregulated. AFAICT It's at least regulated by convention with regards to the pay out for mining.
In addition to tax issues, I'd also worry at least a bit about whether or not accepting money for your software might affect warranty disclaimers. I would not be surprised if in some jurisdictions it is harder for a commercial project to disclaim warranties, and for accepting money to cause a project to be classified as commercial.
I don't have any use for tip4commit, personally, and couldn't care less if it succeeds either way. I did read the GitHub site, though, and your case 1) is incorrect. They return the money if it isn't claimed.
Are you sure about that? They said they return it to "the project", but that in no way guarantees that the money will go to any developer.
The tip4commit people are clearly putting growth of their product above everything else, and that's generously assuming honorable intentions on their part. I couldn't see any clear strategy for getting money back to the original donors if a developer or project does not end up claiming the donation.
1. The obvious, that they are collecting funds on behalf of other people's work and then keeping them when the funds go 'unclaimed'
2. Even if you do want to claim it, they don't make it easy, and for someone in a complicated tax country (like the author, Austria) there is almost no way he could accept the money without incurring some kind of risk. So basically when they are keeping money that goes unclaimed it's very problematic because they don't make the money easy to claim in the first place. Obvious incentives issues.
Point 2 is what this article is about.