Daily Archives: April 28, 2017

Appeals to NSA college expansion could be coming – Moscow-Pullman Daily News

Posted: April 28, 2017 at 2:48 pm

While the Moscow Board of Adjustment approved New Saint Andrews College's conditional use permit application to allow the college to expand into the former Cadillac Jack's building on North Main Street, an appeal to the board's decision could be imminent.

Moscow's assistant community development director, Mike Ray, said his office has already fielded a number of calls and emails asking about the appeal process, and he anticipates an appeal will be made. The appeal period, which starts Tuesday, will last 10 days, meaning any objections must be filed by May 11.

Ray said the Board of Adjustment will meet at 5:30 p.m. Monday in the council chambers at City Hall to approve a relevant criteria and standards document, which will reflect the board's Tuesday decision, and finalize the conditional use permit's approval. Afterward, appeals can be filed by anyone.

To appeal, the appellant is required to submit a letter to the city stating his or her reasons for the appeal and to pay a $220 appeal fee, Ray said.

The City Council would then address the appeal. No new public testimony would be allowed at that time except for comments from the appellant, Ray said. The councilors would also refer to Tuesday night's Board of Adjustment meeting for information. Ray said the City Council would be allowed to sustain the Board of Adjustment's decision, reverse the board's decision or remand the decision back to the Board of Adjustment.

The CUP would allow NSA to convert the former CJ's building at 112 N. Main St. into a music conservatory. It would be allowed a maximum enrollment of 300 full-time equivalent students and 44 full-time equivalent faculty and staff. The facility would include five classrooms/studios, nine offices, a multi-purpose room, a student lounge and a music conservatory with seating for 680 occupants, according to the Board of Adjustment packet for Tuesday night's meeting.

NSA President Benjamin Merkle said 165 students are enrolled at the college's existing campus on Main Street.

The board approved the conditional use permit with two conditions related to parking that city staff recommended. NSA must provide 47 off-street parking spaces within approximately half of a mile of the property, subject to the approval of the zoning administrator.

NSA will be allowed to phase in the off-street parking requirement by providing 50 percent of the required parking mitigation upon occupancy of the building and the remainder when NSA's enrollment reaches 150 students, or five years from the date of the issuance of the Certificate of Occupancy of the building, whichever comes first.

Moscow Mayor Bill Lambert said he is fine with the private Christian college expanding downtown and he is happy someone plans to use the former CJ's building again. He said the proposed expansion is an emotional issue on both sides.

"It's a good use of the building as far as I'm concerned," Lambert said.

He said parking seemed to be the biggest concern and the Board of Adjustment appeared to address that with its conditions.

"I think they've been good for downtown businesses ... for restaurants and places like that," Lambert said of NSA students.

Some residents said Tuesday night that they believed colleges belong outside the Central Business Zoning District, but Lambert said he does not have a problem with allowing educational institutions downtown. He said NSA is a small school, unlike the University of Idaho.

City Councilman John Weber said his only conflict with the proposed expansion is that the former CJ's building might not be subject to property taxes. He said he would prefer to see a business that would be required to pay property taxes to occupy the building.

"Every year we're fighting the budget as all towns do and I would like to see more commercial development that pays property taxes and things like that," Weber said. "So it can be beneficial to the town as far as infrastructure and things like that."

Alyssa Hartford, Latah County senior residential appraiser, said NSA owns two buildings downtown. One of them, which fronts Friendship Square at 109 W. Fourth St., is partially exempt from property taxes since a portion of the building includes a restaurant. The other building at 409 S. Main St. is fully exempt from property taxes because it is used for educational purposes, Hartford said.

She said if NSA expanded to North Main Street, it would possibly qualify for a property tax exemption. The school could file as a property used for school or educational purposes and submit its application to the Board of County Commissioners, which would make a decision.

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Russian Cybercriminals Are Loving Those Leaked NSA Windows Weapons – Forbes

Posted: at 2:48 pm


Forbes
Russian Cybercriminals Are Loving Those Leaked NSA Windows Weapons
Forbes
It's been little over a week and a half since a hacker crew called the Shadow Brokers released a batch of tools believed to have belonged to the NSA, designed to break through the defences of Windows systems. Whilst Microsoft mysteriously patched its ...
Leaked NSA tools, now infecting over 200000 machines, will be weaponized for yearsCyberScoop
How leaked NSA spy tools created a hacking free-for-allCNNMoney
NSA backdoor detected on >55000 Windows boxes can now be remotely removedArs Technica
TechTarget -LifeZette -TrendinTech -TechNet Blogs - Microsoft
all 63 news articles »

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Donald Trump delivers 100 days of 2nd Amendment victories: Chris Cox – USA TODAY

Posted: at 2:45 pm

Chris Cox 8:47 a.m. ET April 28, 2017

President Trump, Vice President Mike Pence and Interior Secretary Ryan Zinke on April 26, 2017.(Photo: MIKE THEILER / POOL, EPA)

After eight long years, we once again havea president who respects and cherishes individual freedom. For Americas law-abiding gun owners, theTrump administrationis proving to beamongthe best in history. Soits important to take stock of all he has accomplished on behalf of the SecondAmendment inaveryshort time.

Thanks to President Trump,we are now back tohavinga 5-4pro-gunmajority on the U.S. Supreme Court. He appointed Jeff Sessionsas Attorney General,which means the Department of Justicewill return to focusing on prosecuting violent criminals instead oftargetinglaw-abiding gun owners.In Secretary of the Interior RyanZinke, Trump has appointed a man whois firmly committed to protecting hunting and shooting as priority uses on our public lands.In fact,Zinkerepealed one ofBarack Obamas most egregious anti-gun policieson his very first day on the job.

Ultimately, politicians are judged on whether they keep their promises. Forlaw-abidinggun owners, Trump has kept his promises, after running as the most pro-Second Amendment candidate in history.

Soonafter his inauguration, the president nominated NeilGorsuchto the Supreme Court.Justice Gorsuchbelieves in interpreting the law as the Framers intended. He will followthe example of Antonin Scalia,who wrote the majority opinion inthe most important Second Amendment decision inmodern history,District of Columbia v. Heller. That case reaffirmedthatthe Second Amendment protects the right of an individual to keep a firearm in their home for self-defense. Neil Gorsuch willprotect that right.

Trumpeting Ann Coulter's free speech: Alicia Shepard

10 ways 100 days have not been weird: Column

POLICING THE USA:Alook atrace, justice, media

Sessions will restore the rule of lawto the Justice Department. As our nations chief law enforcement officer,he willwork vigorously to respectindividual freedoms of American citizenswhile making our communities safer by cracking down on violent criminals.

Trump also made good on his promisewhen he nominated Zinketo lead the Interior Department.Zinke, aformer Navy Seal and avid outdoorsman, repealed theObama administration's ban on lead ammo on federal land on his first day in office.He knowsthat Americas sportsmen and women are critical toconservationandunderstands thatmanagementdecisions must recognize the importance of hunting, shooting, and other traditional uses on public lands.

Trump has also acted to protect the self-defense rightsof Social Security beneficiaries, repealing an eleventh-hour Obama rule that banned them.

For all he has accomplished, there is still a lot of work to do.Our fight is not over. But in Trump, we now have a president who trulybelieves in individual freedom.

Chris W. Cox is executive director of theNational Rifle Association Institute for Legislative Action.

You can readdiverse opinions from ourBoard of Contributorsand other writers ontheOpinion front page,on Twitter@USATOpinionand in our dailyOpinion newsletter.To respond to a column, submit a comment toletters@usatoday.com.

Read or Share this story: http://usat.ly/2qebpyo

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LETTER: Smart laws to protect Second Amendment rights crucial – Tuscaloosa News

Posted: at 2:45 pm

Mark GrissomNorthport

As a firm believer in our Second Amendment rights, I have legally carried concealed for almost my entire life. I have had training and practice regularly to ensure I can protect myself, my family, and those around me without unnecessary risk to the public. If cost is a factor for those who wish to carry concealed, I would certainly support a waiver of permit fees.

I respect the rights of property owners if they ban firearms; however, I believe they should be held accountable in providing protection.

I am very concerned about the reckless expansion of gun rights into non-permitted carry. My biggest concerns are:

Officers wouldnt have the right to properly investigate persons with firearms on them.

Those with criminal or terrorism intent have a pass to have a readily available firearm, and if caught they can walk away to try again.

Home intrusions, domestic violence, work disputes, and road rage situations are likely to see increased involvement of firearms.

Untrained individuals will place all of us at a significantly greater risk.

In a society becoming more and more emotionally unstable because someone else has a different perspective or opinion, this type of legislating could be dangerous.

Smart laws that protect our Second Amendment rights are crucial to our way of life; putting reckless gun laws in place is the fastest way to create decreased support for the Second Amendment and thus weakens it.

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The First Amendment doesn’t guarantee you the rights you …

Posted: at 2:44 pm

That's it. That's the entirety of our Constitution's First Amendment, the central animus of our American way of life that gets dragged out every time someone's banned from Twitter.

There's a lot going on in those few sentences, and it's important to know when and how it applies to common situations -- and, equally as important, when it doesn't.

Let's look at some common First Amendment arguments; illuminated and debunked by a constitutional expert.

If it's a private institution, it's probably not a First Amendment issue.

If it's a public institution, the lines can get blurry.

"If you invite someone to speak on your campus and are a public university, you have to respect their First Amendment rights," Nott says. That doesn't mean you can't put regulations on a speech, like dictating the time, place, venue and suggestions for subject matter. It just means you can't do so in a way that discriminates against a certain point of view.

If students protesting play a hand in moving or canceling a speaker, that presents a different free speech challenge.

"If a speaker were to take legal action for being blocked from speaking, they can't do it against the students. You can't take constitutional action against a group of private citizens," she adds.

Such a complaint would have to go against the school, for allowing the constitutional breach to happen.

This is not a First Amendment issue though plenty of people think it is.

This scenario illustrates one of the biggest misconceptions people have about the First Amendment. Bottom line: It protects you from the government punishing or censoring or oppressing your speech. It doesn't apply to private organizations. "So if, say, Twitter decides to ban you, you'd be a bit out of luck," Nott says. "You can't make a First Amendment claim in court."

However, while it's not unconstitutional, if private platforms outright ban certain types of protected speech, it sets an uncomfortable precedent for the values of free speech.

If you work for a private company, it's probably not a First Amendment issue.

"It's the company's right to discipline their employees' speech," Nott says.

If you're a government employee, it's complicated.

Institutions like police departments, public schools and local government branches can't restrict employee's free speech rights, but they do need to assure that such speech doesn't keep the employee from doing their job. It's definitely a balancing act, and the rise of social media has made it harder for such institutions to regulate their employee's speech in a constitutional manner.

Definitely a First Amendment issue.

But, like pretty much everything in law, there are exceptions and nuances.

"It's definitely unconstitutional, unless you are trying to incite people to violence with your speech," Nott says. Even then, it needs to be a true threat -- one that has immediacy and some sort of actual intent.

It's a private company, so it's not a First Amendment issue.

There's that refrain again: Private companies, like social media sites, can do whatever they want.

But regulating conversations and posts online is a delicate balance for social media giants like Facebook.

"That says, if you are an internet company and you have some way for people to post or leave comments, you are not liable for what they do," Nott says. This covers things like obscenity, violence and threats.

The problem is, this protection often butts up against the enforcement of basic community standards.

"Facebook is under enormous pressure to take down, not just violent and illegal content, but fake news," Nott says. "And the more it starts to play editor for its own site, the more likely it is to lose that Section 230 protection."

This is a First Amendment issue, at the very least in spirit.

"Symbolic speech is protected by the constitution," Nott says. "In essence, you have the right to not speak. You have the right to silence."

In theory, a private employer could require you to stand for the anthem or say the Pledge of Allegiance, but such a requirement may run afoul of the Civil Rights Act. Even in schools, where there have been some cases of students being singled out for sitting or kneeling for the anthem, it would be hard to provide justification for punishment.

"This is an act of political speech, the most protected type of speech," Nott says. "It's completely not disruptive because it's silent." Plus, it is buttressed by court cases that have decided there is no requirement to salute the flag.

A First Amendment issue -- usually.

You are fully within your rights to record the police doing their job in public. And if you get arrested while doing so, your constitutional rights are being violated.

This is, unless you were doing something unlawful at the time of your arrest.

In a heated situation with police, that can also become a gray area. Physical assault or threats could obviously get you arrested, but what about if you were just yelling at the police while recording, say, to get them to stop an act or to pay attention?

"That's tough," Nott says. "If you were disturbing the peace, you can get arrested for that, or for other things. But the bottom line is it's not a crime to record police activities in a public space."

If it's a student publication, it's a First Amendment issue.

Nott points to a landmark Supreme Court cases from 1969 that has acted as a standard for cases involving free speech at public universities and colleges. That's Tinker v. Des Moines Independent Community School District, which you can read more about below.

Another case, Bazaar v. Fortune from 1973, helps tailor these guidelines to the student press by stating that schools cannot act as "private publishers" just because they fund a student publication or program. In other words, they can't punish the publication -- whether it be through student firings, budget cuts or withdrawals or a ban -- just for printing or broadcasting something they don't like.

Now, a gentle reminder that this is just for PUBLIC schools. All together now: Private institutions can (usually) do what they want!

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The First Amendment doesn’t guarantee you the rights you think it … – CNN

Posted: at 2:44 pm

That's it. That's the entirety of our Constitution's First Amendment, the central animus of our American way of life that gets dragged out every time someone's banned from Twitter.

There's a lot going on in those few sentences, and it's important to know when and how it applies to common situations -- and, equally as important, when it doesn't.

Let's look at some common First Amendment arguments; illuminated and debunked by a constitutional expert.

If it's a private institution, it's probably not a First Amendment issue.

If it's a public institution, the lines can get blurry.

"If you invite someone to speak on your campus and are a public university, you have to respect their First Amendment rights," Nott says. That doesn't mean you can't put regulations on a speech, like dictating the time, place, venue and suggestions for subject matter. It just means you can't do so in a way that discriminates against a certain point of view.

If students protesting play a hand in moving or canceling a speaker, that presents a different free speech challenge.

"If a speaker were to take legal action for being blocked from speaking, they can't do it against the students. You can't take constitutional action against a group of private citizens," she adds.

Such a complaint would have to go against the school, for allowing the constitutional breach to happen.

This is not a First Amendment issue though plenty of people think it is.

This scenario illustrates one of the biggest misconceptions people have about the First Amendment. Bottom line: It protects you from the government punishing or censoring or oppressing your speech. It doesn't apply to private organizations. "So if, say, Twitter decides to ban you, you'd be a bit out of luck," Nott says. "You can't make a First Amendment claim in court."

However, while it's not unconstitutional, if private platforms outright ban certain types of protected speech, it sets an uncomfortable precedent for the values of free speech.

If you work for a private company, it's probably not a First Amendment issue.

"It's the company's right to discipline their employees' speech," Nott says.

If you're a government employee, it's complicated.

Institutions like police departments, public schools and local government branches can't restrict employee's free speech rights, but they do need to assure that such speech doesn't keep the employee from doing their job. It's definitely a balancing act, and the rise of social media has made it harder for such institutions to regulate their employee's speech in a constitutional manner.

Definitely a First Amendment issue.

But, like pretty much everything in law, there are exceptions and nuances.

"It's definitely unconstitutional, unless you are trying to incite people to violence with your speech," Nott says. Even then, it needs to be a true threat -- one that has immediacy and some sort of actual intent.

It's a private company, so it's not a First Amendment issue.

There's that refrain again: Private companies, like social media sites, can do whatever they want.

But regulating conversations and posts online is a delicate balance for social media giants like Facebook.

"That says, if you are an internet company and you have some way for people to post or leave comments, you are not liable for what they do," Nott says. This covers things like obscenity, violence and threats.

The problem is, this protection often butts up against the enforcement of basic community standards.

"Facebook is under enormous pressure to take down, not just violent and illegal content, but fake news," Nott says. "And the more it starts to play editor for its own site, the more likely it is to lose that Section 230 protection."

This is a First Amendment issue, at the very least in spirit.

"Symbolic speech is protected by the constitution," Nott says. "In essence, you have the right to not speak. You have the right to silence."

In theory, a private employer could require you to stand for the anthem or say the Pledge of Allegiance, but such a requirement may run afoul of the Civil Rights Act. Even in schools, where there have been some cases of students being singled out for sitting or kneeling for the anthem, it would be hard to provide justification for punishment.

"This is an act of political speech, the most protected type of speech," Nott says. "It's completely not disruptive because it's silent." Plus, it is buttressed by court cases that have decided there is no requirement to salute the flag.

A First Amendment issue -- usually.

You are fully within your rights to record the police doing their job in public. And if you get arrested while doing so, your constitutional rights are being violated.

This is, unless you were doing something unlawful at the time of your arrest.

In a heated situation with police, that can also become a gray area. Physical assault or threats could obviously get you arrested, but what about if you were just yelling at the police while recording, say, to get them to stop an act or to pay attention?

"That's tough," Nott says. "If you were disturbing the peace, you can get arrested for that, or for other things. But the bottom line is it's not a crime to record police activities in a public space."

If it's a student publication, it's a First Amendment issue.

Nott points to a landmark Supreme Court cases from 1969 that has acted as a standard for cases involving free speech at public universities and colleges. That's Tinker v. Des Moines Independent Community School District, which you can read more about below.

Another case, Bazaar v. Fortune from 1973, helps tailor these guidelines to the student press by stating that schools cannot act as "private publishers" just because they fund a student publication or program. In other words, they can't punish the publication -- whether it be through student firings, budget cuts or withdrawals or a ban -- just for printing or broadcasting something they don't like.

Now, a gentle reminder that this is just for PUBLIC schools. All together now: Private institutions can (usually) do what they want!

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Is the First Amendment dead? – Times-Enterprise

Posted: at 2:44 pm

Last Wednesday, officials of the University of California Berkeley announced that they were canceling a speech to be given by conservative writer Ann Coulter scheduled for April 27. Then last Thursday, facing the prospect of a lawsuit, caught between the First Amendment and the fear of violence, university officials proposed that Coulters speech be moved to May 2 a move she and her supporters quickly rejected, pointing out that there would be no students on campus, as it coincided with a reading period before final exams.

This was a low point for the birthplace of the free-speech movement.

Ive known Ann Coulter for years, and Ive gone to great lengths truly great lengths to disagree with her. After she published a book called Godless, which accused liberalism of being a godless religion, I wrote a book called Soulless, which attacked the right-wing church of hate. I even donned her trademark sleeveless black dress, added about 10 inches of long blonde hair and posed for a cover that looked almost as sexy as hers.

We agree on almost nothing, except for the importance of free speech and public discourse. And we have always gotten along just fine.

Last summer, when a reporter went to her for comments about me, she could not have been more gracious. Thats how it should be in a democracy.

Our Founding Fathers understood something that seems to be getting lost in the ugly partisanship that has gripped our country. You dont deal with speech you dont like by shutting it down. You deal with it by speaking up yourself.Speech is powerful; it is protected not because it is harmless but because the alternative is even worse.And that alternative is what were facing now.

It is not just at Berkeley that this issue is rearing its ugly head. In response to the cancellation of a speech at Claremont-McKenna College by Heather Mac Donald, the president of Pomona College (part of the Claremont Colleges consortium) wrote an open letter defending the principle of free speech. To my shock, frankly, a group of African-American students went on the attack, claiming that white supremacists (Mac Donald is a fellow of the conservative Manhattan Institute, not the Klan) have no right to free speech. Come again? Who is supposed to decide who gets to speak? Do these students not understand that it is precisely oppressed minorities who have historically needed the protection of the First Amendment the most? Do they really think that if speech is regulated, they will be the beneficiaries? On which planet? Under which president?

For those who disagree with Coulter, shutting down her speech only elevates her position. Instead of speaking before a group of students two weeks before exams, the cancellation has brought her national attention and brought Berkeley the criticism it must surely have expected.

But blaming Berkeley is the easy way out. One way or another, the great majority of Americans who support the Constitution must stand up to the minority who think violence and censorship is the answer to speech they dont like. You cannot pick and choose which civil liberties to support, which opinions deserve protection.

As a writer myself, I get more than my share of ugly emails from people who disagree with me. No one enjoys reading those. And as a woman and a Jew, I have sharply felt the sting of hatred. But unless there is a threat of violence (the Constitution provides for shutting down speech if it poses an imminent threat of violence or an imminent threat to national security), the way to handle such ugly emails is simply hitting the Trash button, or better yet, responding with more speech.

Because if you shut down free speech this time, next time, the one who is shut down might be you.

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Is the First Amendment dead? - Times-Enterprise

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Buskers’ First Amendment lawsuit allowed to proceed – Ocean City Today

Posted: at 2:44 pm

By Katie Tabeling | Apr 27, 2017

(April 28, 2017) Boardwalk performers who disagree with Ocean City governments registration system could have their day in court, as a U.S. District Court judge has denied the citys motion to dismiss their lawsuit.

The decision issued last Tuesday by Judge William M. Nickerson was that the plaintiffs argument that the regulations restrict their First Amendment rights have merit.

In 2015, several Boardwalk buskers and local activist Tony Christ filed suit seeking $1 million in punitive and compensatory damages as a result of the citys ordinance that established a first come, first serve sign-up system for roughly 30 spaces. The performers and Christ also sought injunctive relief.

Last year, Ocean City adjusted its regulations to a lottery drawing for spaces and officials worked with performers to hear their complaints this past summer. However, the lawsuit continued.

The suit was rejected twice by the court because of procedural missteps, but then attorney David Gray Wright took the case on behalf of the plaintiffs and filed a third suit last September.

While not reaching the merits of the motions to dismiss it is clear that Plaintiffs action arises under the First Amendment of the United States

Constitution, which can be enforced against municipalities through due process clause [in the 14th Amendment, Nickerson wrote in his opinion.

Last year, City Solicitor Guy Ayres filed a motion to dismiss the lawsuit, arguing that the complaint was little more than legal conclusions that the ordinance violates the First Amendment.

Nickerson disagreed and said that the third complaint detailed exactly how performers were limited.

Significantly, in support of this portion of its motion [to dismiss], Ocean City cites no case law in any way related to free speech and expressions claims, he wrote. Upon review of the allegations in the third amended complaint and the relevant case law, the court concludes that the plaintiffs allegations are more than sufficient to state claims for relief.

Several examples Nickerson referenced included magician and ventriloquist Joseph Smith, whose act draws large crowds and would need a larger space than permitted by the ordinance.

Another example was Bob Peasley, a singer and guitar player who suffers from partial paralysis and uses a wheelchair. His physical restrictions make it difficult for him to be physically present for the weekly lottery, the complaint contends.

Considering that, Nickerson wrote that the complaint aptly demonstrates how the ordinance has limited buskers artistic endeavors.

They have further alleged that these restrictions are substantially broader than necessary to achieve Ocean Citys interest, he wrote. While Ocean City may be able to refute those allegations, at this stage in the proceedings, the court must accept them as true and draw all inferences in the plaintiffs favor.

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Tor Browser: Private And Anonymous Browsing Made Simple – FileHippo News

Posted: at 2:43 pm

Tor Browser is perhaps the single most accessiblepiece of software you can use to keep your online activities private and anonymous, while at the same time enhancing your security.Its also incredibly easy to use, using as it does, a modified version of Mozillas Firefox browser.To put it simply, if you can use Google, you can use the Tor Browser.

Firstly, Tor itself is an acronym and an analogy.It stands for the The Onion Router, the idea being that like an onion, Tor has many layers of encryption and protection built into it, that make it easy for you to become anonymous online, and make it next to impossible to track you, and your activities.

In real terms, Tor has been designed to stop anyone, including government agencies, Internet Service Providers, and corporations from learning your location, and from consequentlytracking your browsing habits and selling that data on.

Proof of just how effective the Tor Browser, and the Tor network it runs on can be proved by the fact that lots of journalists, activists, law enforcement professionals, whistle-blowers and businessesalluse it.Normal people like you and me who want to keep their activities safe and private from websites and advertisers use it as well.

The protocol behind how Tor works was originally designed for the US Navy as a way of being able to use existing communications networks around the world securely. The US Navy still uses it today.

Tor Browser works by first of all encrypting the web traffic you send out into the Internet. It then routes all your web traffic through the Tor network, a series of relays or nodes run by thousands of volunteer computers around the world taking different routes each time. This makes it extremely hard for anyone to identify the source of the information and next to impossible to track the user. While thats a ridiculously simple analogy of how Tor works, it pretty much covers all the bases.

Very. You dont really need to know anything about encryption or how it all works. Tor is also based on the not-for-profit Mozilla Firefox browser, looks good, and crucially, is simple and easy to use.

Tor Browser is also 100% free, open source, and you can download the latest version completely free right here on Filehippo.com. Isnt that great?

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Cryptocurrency and taxes – thetaxadviser.com

Posted: at 2:42 pm

About 10 to 15 years ago, the IRS began serving "John Doe" warrants to foreign banks to compel those banks to release the names of account holders on certain bank accounts. This was followed by a tough crackdown by the Service on taxpayers who failed to file FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR), which certain foreign bank account holders are required to file (and face stiff penalties for not filing, including jail time).

On Nov. 30, 2016, a federal judge in the Northern District of California granted an IRS application to serve a John Doe summons on Coinbase Inc., which operates a virtual currency wallet and exchange business (In re the Tax Liabilities of John Does, No. 3:16-cv-06658-JSC (N.D. Cal. 11/30/16) (order granting ex parte petition)). This was done under the authority of Sec. 7609(f):

(f) Additional requirement in the case of a John Doe summons: Any summons . . . which does not identify the person with respect to whose liability the summons is issued, may be served only after a court proceeding in which the Secretary establishes that

(1) the summons relates to the investigation of a particular person or ascertainable group or class of persons,

(2) there is a reasonable basis for believing that such person or group or class of persons may fail or may have failed to comply with any provision of any internal revenue law, and

(3) the information sought to be obtained from the examination of the records or testimony (and the identity of the person or persons with respect to whose liability the summons is issued) is not readily available from other sources.

Coinbase, a digital asset exchange company headquartered in San Francisco, operates exchanges of bitcoin, Ethereum, and other digital assets with currencies in 32 countries and bitcoin transactions and storage in 190 countries worldwide. The summonses asked Coinbase to identify all United States customers who transferred convertible virtual currency from 2013 to 2015. At that point, Coinbase dealt only with bitcoin.

Coinbase is not the only medium for trading cryptocurrencies. Largely, cryptocurrency has gone unregulated, so these warrants are issued to level the playing field for the government. The author believes that Coinbase is just the first of many IRS targets.

Cryptocurrency transactions

Why would the IRS care about cryptocurrency? For two reasons:

I was the tax consultant for the largest fund of cryptocurrency a few years ago before it disbanded. The way this fund made money was by converting U.S. dollars or euros into bitcoin. Then the bitcoin was converted to another cryptocurrency, and then another, and so it went. All of these transactions were tracked and made public using blockchain, which is a digital ledger in which transactions made in bitcoin or other cryptocurrencies are recorded chronologically and publicly. Each conversion is a taxable transaction.

It is easiest to think of cryptocurrency as a commodity, such as gold and platinum. Let's say an investor buys an ounce of gold and then converts the gold to platinum. That would be a taxable event. Gold has a dollar value and platinum has a dollar value, with the difference being taxable. Just like any currency or commodity, the cost of one unit of any cryptocurrency changes by the second.

For example, let's say a person bought $200,000 worth of bitcoin. His or her basis in the bitcoin would be $200,000. That number of bitcoin can either be converted into other cryptocurrencies or be used to pay for goods and services. In 2013, only a few large retailers would take bitcoin for payment. That number has since exploded to several thousand.

Miners, traders, or investors access their virtual currencies through a wallet, which is the bitcoin equivalent of a bank account. The wallet enables virtual currency owners to receive the virtual currency, provides storage for them, and enables the owner to send them to other wallets. There are two main types of wallet. The first is a software wallet, which virtual currency owners install on their computer or electronic device. This type of wallet gives the owner total control, yet it can be challenging to download and maintain. The second type, the web wallet (or hosted wallet), is hosted by a third party, and while it is easier to use, a certain trust must be placed in the provider to ensure the coins are protected.

Once a wallet is set up, the virtual currency owner then has an address that looks something like this: 1BvBMSEYstWetqTFn5Au4m4GFg7xJaNVN2.

After the wallet's owner chooses a password, by the way, there is no way to change it, which makes it imperative that the owner write down the password and secure it in a safe location. A client of the author lost $250,000 because the safe where he kept his wallet address and password was sent to an incinerator. A wallet's owner has no way to access the wallet without the string of letters and numbers and the password.

IRS takes notice

In response to concern over virtual currencies and their perceived potential for evading taxes, the IRS issued Notice 2014-21 in March 2014. This notice gave guidance on everything from paying employees with cryptocurrency to how the various trades between different currencies are treated.

But in a 31-page report from the Treasury Inspector General for Tax Administration, released Sept. 21, 2016, the IRS basically admitted that though a Virtual Currency Issue Team had been created, guidelines for compliance had not been developed. The recommendations from this report included developing a coordinated virtual currency strategy, providing updated guidance for requirements and tax treatments, and revising third-party reporting requirements and documents.

Another problem that the IRS has had with virtual currencies is that the transactions by miners, traders, or other investors are not currently reported on any tax forms. For instance, investors who trade foreign currency on the Forex (a foreign exchange site) are sent tax forms for all of the trades made on the platform. However, cryptocurrency exchanges do not currently issue Forms 1099 for transactions within the platforms.

As touched on earlier, cryptocurrency could conceivably be used for money-laundering activities. Unlike money issued by governments, cryptocurrency has no Federal Reserve, no gold backing, no banks, and no physical notes. Thus, it has the potential for being used in illegal activities. A criminal could simply convert "dirty money" gained through an illegal activity to something like bitcoin and use it to trade for goods and services.

Coinbase summonses

In response to the possibility that cryptocurrency users could be using their accounts for illicit activities or to evade tax, the IRS issued a John Doe summons to Coinbase asking for information about all of its customers from Jan. 1, 2013, to Dec. 31, 2015. According to the IRS, in a filing in support of the summons request, an IRS agent attested to the fact that he had uncovered two taxpayers who admitted that they disguised the amounts they spent purchasing bitcoins as deductible technology expenses (Erb, "IRS Wants Court Authority to Identify Bitcoin Users & Transactions at Coinbase," Forbes (Nov. 21, 2106)). The estimated number of Coinbase's customers during the period the summons covers could be "massive," according to Forbes.

As cryptocurrency has evolved, the IRS has had to play catch-up with the miners and others trading on this platform. The John Doe warrants are just the beginning of this enforcement process for the IRS.

Craig W. Smalley, MST, is an enrolled agent and the founder and CEO of CWSEAPA PLLC, which provides accounting and financial services.

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