IRS Is Preparing Hundreds of Crypto Tax Evasion Cases

IRS Is Preparing Hundreds of Crypto Tax Evasion Cases


The United States Internal Revenue Service (IRS) criminal division has said that it is gearing up for the tax season and has its sights set on the crypto community.

Per reports from Bloomberg Law, Jim Lee, a division chief at the IRS, said that the service is actively preparing “hundreds” of crypto-related cases and added that these cases will soon be available to the public. The cases involve crypto-to-fiat “off-ramping” transactions, as well as individuals being paid in crypto and not reporting it as income. Over the past few years, investigations into digital assets conducted by the IRS have changed from being mostly money-laundering related, to a point where tax-related cases make up almost half. The Treasury Department also admitted that crypto-money laundering, while still an issue, is less impactful than fiat-based laundering as it stands.

The IRS’s announcement comes not long after the service was granted the power to issue a “John Doe” summons to M.Y. Safra Bank. The summons forces the bank to hand over information about its customers who have failed to declare and pay taxes on cryptocurrency transactions that were conducted over the crypto exchange SFOX. The IRS has made it clear that it plans to ramp up hiring across the agency. Lee also added that the tax authority is expecting a “more significant” hiring spree for the rest of the fiscal year.

The IRS also released a report earlier in the month that states that in 2022 the 2,077 special agents of the criminal division spent almost 70% of their time investigating tax-related crimes such as tax evasion and fraud. The remaining 30% was spent on money laundering and drug trafficking cases. Lee added that following the money is nothing new for the agency and added that they are ready to pivot into new areas such as Web 3.0:

We’ve been doing it for more than 100 years, and we’ve followed criminals into the dark web and now into the metaverse.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice. 

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