- IRS collaborates with Chainalysis and other agencies to enhance tracking and prosecution of crypto transactions.
- Taxpayers advised to accurately report crypto gains; failure to do so can lead to aggressive IRS actions.
The Internal Revenue Service (IRS) is preparing for an increase in cases involving cryptocurrency-related tax evasion.
Guy Ficco, head of the IRS Criminal Investigation Division, discussed the agency’s readiness to tackle tax fraud associated with, highlighting the shift towards direct tax violations such as unreported income from cryptocurrency transactions.
#IRS reminder: Quarterly estimated tax payment due April 15. Learn more: https://t.co/lCbHFj4O1K pic.twitter.com/6ikD4rlGKq
— IRS Tax Pros (@IRStaxpros) April 10, 2024
In an interview, Ficco emphasized the growing problem of tax evasion in the realm of digital currencies. He noted that, traditionally, crypto have been linked to financial crimes like fraud and money laundering.
Recently, however, there has been a notable rise in cases purely involving tax violations with crypto, including the incorrect reporting of income and misstatements of asset cost bases.
To combat these challenges, the IRS has partnered with blockchain analytics firm Chainalysis and other law enforcement agencies.
This collaboration aims to enhance the IRS’s ability to track and analyze cryptocurrency transactions effectively, using advanced technological tools necessary for investigating the complex and often opaque nature of digital currency transactions.
Ficco also provided guidance on proper tax reporting for cryptocurrency transactions. He explained that taxpayers are required to report any gains realized from their transactions. For instance, if someone buys a cryptocurrency asset for $10,000 and sells it for $20,000, they must report a gain of $10,000.
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Furthermore, the IRS has intensified its efforts in prosecuting individuals who have either neglected to report their cryptocurrency finances or have knowingly provided false information on their tax returns.Â
This includes cases like the recent indictment of a Texas resident accused of omitting over $4 million in Bitcoin gains from his tax filings, emphasizing the agency’s commitment to enforcing tax laws amidst the evolving digital financial landscape.
