IRS Anticipates Surge in Crypto-Related Tax Evasion; Establishes Partnerships to Tackle Issue
Summary:
The U.S. Internal Revenue Service (IRS) is prepared for an anticipated increase in cryptocurrency-related tax crimes, says the agency's criminal investigation chief, Guy Ficco. According to Ficco, the IRS has noted a sharp rise in "pure crypto tax crimes", from unreported income to misleading reports about crypto origins. To combat this, the IRS is collaborating with blockchain analysis company Chainalysis and other law enforcement agencies. Ficco also shared advice for proper tax filing, highlighting the importance of accurately reporting asset gains.
Crypto-related tax evasion is expected to significantly increase, according to the U.S. Internal Revenue Service (IRS), in line with the tax-filing deadline of April 15 for American citizens. Guy Ficco, the chief of criminal investigation at the IRS, made these comments during an engagement at the Chainalysis Links event in New York. He noted that they anticipate a rising tide of tax fraud and evasion cases. He said, "This year and beyond, we'll likely see a surge in the number of Title 26 crypto cases."
Title 26 of the tax code references citizens who deliberately manipulate or falsify their tax reporting documents to avoid paying taxes. Previously, cryptocurrencies were mainly associated with financial crimes like fraud, money laundering, and scams. However, Ficco noted a sharp uptick in purely cryptocurrency-related tax crimes and expects this trend to continue. The IRS is bracing for an acceleration in such cases.
The crime could range from not declaring income yielded from cryptocurrency transactions to misleading reports about the origin of the cryptocurrency. To tackle these burgeoning criminal activities, the IRS has established collaborations with blockchain analysis company Chainalysis and various other law enforcement agencies.
Ficco highlighted that IRS agents are skilled in tracking money. When it's about applying specific tools needed in the crypto sphere, collaboration with industry experts like Chainalysis becomes crucial. Ficco also provided some broad guidelines for correct tax filings to help taxpayers avoid penalties from the IRS.
His advice was simple: individuals should have an accounting record of the asset. The selling point of the asset should be declared as the disposition. For example, if one bought something for $10,000 and later sold it for $20,000, the $10,000 gain is subject to taxation.
The IRS has ramped up its efforts towards ferreting out and taking legal action against U.S. citizens that either did not report their cryptocurrency-related incomes or falsified their tax returns. For instance, on February 6, a Texas man named Frank Richard Ahlgren III was indicted by a federal grand jury for falsely reporting his taxes and not disclosing gains exceeding $4 million from Bitcoin trading.
Published At
4/15/2024 3:39:59 AM
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