From: tcmay@netcom.com (Timothy C. May)
Date: Fri, 13 Aug 93 23:33:09 PDT
To: cypherpunks@toad.com
Subject: Solicitation of Tax Evasion--An Example
Message-ID: <9308140630.AA17518@netcom5.netcom.com>
MIME-Version: 1.0
Content-Type: text/plain



What could anonymous systems be used for? Besides allowing anonymity
in posting embarrassing or otherwise "questionable" messages, is there
any _commercial_ use? 

These are questions I hear a lot. Yes, there are commercial uses.

Here's a case that just came wafting across the Net: a woman who wants
to evade taxes--she states this explicitly--by bartering her labor for
some software. (I have no problem with this, being against taxes and
all, and knowing that various kinds of untaxable barter exchanges are
going on everywhere.)

Here's her post (no names have been changed, as she posted publicly):

Newsgroups: misc.forsale.computers.mac
From: vanous@mdd.comm.mot.com (Brendan K. Vanous)
Subject: BARTER: graphic design for s/w
Message-ID: <1993Aug14.040010.141@mdd.comm.mot.com>
Summary: would like to barter services for Mac software
Date: Sat, 14 Aug 1993 04:00:10 GMT


POSTING FROM MY HUSBAND'S ACCOUNT (mine's temporarily inaccessable):

Hi.  I'm a freelance forms/graphics designer who would like to expand her
software library in an inexpensive (& non-taxable :-) manner.  Therefore,
I would like to propose the following:

I will trade any of my design services (business forms, business cards,
illustrations, manual formatting, brochures, newsletters, any sort of
desktop publishing task that can be performed on a Mac ...) for an
equivalent amount of Mac software (got an extra copy of PageMaker 4.1
lying around that you don't need?)  All software must be original, with
documentation and letter of transferral.  NO PIRATED COPIES, PLEASE!

If interested, please reply to cyphrkt@eskimo.com and I'll reply to you
as soon as I possibly can (probably another 1 or 2 days before I get
my account back up and running), or contact me at (206) 778-3362 by voice.

Thanks!
		- Cindy Vanous

.................


Chances are no IRS types are watching the Net for such
solicitations--and the act of making such an offer is probably not
itself illegal. The IRS would have to investigate, call an audit,
prove taxes were evaded, etc. The existence of her solicitation might
or might not be considered.

But in an era in which every Usenet utterance is recorde in perpetuity
and is available on CD-ROMs for browsing and compilation of databases
and dossiers (you all *do* know this, don't you? Don't bother applying
for certain jobs if you posted too many times, or even once, to
"alt.sex.perversion.whatever").

Furthermore, anyone _reading_ this kind of post can, for example, call
an anonymous (semi-anonymous?) tip line run by the IRS. Last I heard,
tipsters can get 25% of any taxes collected as the result of their
good citizenship.

So, what can anonymity of the sort we discuss do here? After all, if
she's anonymous, how can a tranaction ever be consummated? (I'll leave
aside purely electronic transactions, which could in principle be done
fully anonymously, using a combination of "pools" (the "digital
democracy walls" I have cited before) and anonymous remailers.)

If Cindy were to use an anonymous remailer to post her offer, and then
offer a public key that could be used by anyone who wished to respond
to her offer, a response could then be posted in the same group.
Something like this:

"Alice" (really Cindy): "Want to trade consulting for a used
Macintosh. If you are interested, use this public key to respond:
3$1k8dRW4..."

Bob (really Jack) sees this, decides to offer a deal, encrypts it with
her public key (a one-time public key, used just for this deal), and
used anonymous remailers to post it in place she is sure to see it
(the same newsgroup, for example, or in one of Miron Cuperman's
"pools," or in "alt.w.a.s.t.e," etc.). Bob also includes a public key
she can use to communicate with him.

If they like the general deal, they can then agree (using only their
encrypted channel, readable only to themselves, even though they have
never met and have no idea who the other is or where they live) on the
next step. In a purely electronic transaction, this process can
continue digitally and fully securely.

If physical goods or money need to change hands, they can agree to
meet, to use phones, etc. The risk to Cindy is still there--Bob (Jack)
could of course be a government agent, etc.--but at least she is no
longer broadcasting her intentions for all Usenet readers, present and
future, to potentially see. And no future readers, such as government
computer programs set to scan all postings for evidence of such
illegalities, can retroactively detect and compromise her.

(If no actual physical contact is needed--such as for software sales
and consulting--then of course the contact can in principle remain
fully anonymous. Even the transfer of physical goods can be done with
moderately good security against tracing...smugglers, drug dealers,
and hijackers do it all the time. "Fences," they are called. And so
on.)

This is just one example of how "the little people" can benefit from
the schemes we are exploring. Understand that I have no illusions that
our friend Cindy will soon be using such methods...but maybe in 5
years.


-Tim May

--
..........................................................................
Timothy C. May         | Crypto Anarchy: encryption, digital money,  
tcmay@netcom.com       | anonymous networks, digital pseudonyms, zero
408-688-5409           | knowledge, reputations, information markets, 
W.A.S.T.E.: Aptos, CA  | black markets, collapse of governments.
Higher Power: 2^756839 | Public Key: PGP and MailSafe available.
Note: I put time and money into writing this posting. I hope you enjoy it.


-- 
..........................................................................
Timothy C. May         | Crypto Anarchy: encryption, digital money,  
tcmay@netcom.com       | anonymous networks, digital pseudonyms, zero
408-688-5409           | knowledge, reputations, information markets, 
W.A.S.T.E.: Aptos, CA  | black markets, collapse of governments.
Higher Power: 2^756839 | Public Key: PGP and MailSafe available.
Note: I put time and money into writing this posting. I hope you enjoy it.