The IRS Reports Increase in Digital Asset Investigations
The Criminal Investigation (CI) Unit of the United Internal Revenue Service (IRS) has seen a rise in investigations related to digital asset reporting, according to its annual report. In the 2023 fiscal year, the CI initiated over 2,676 cases and identified more than $37 billion in tax and financial crimes. The increase in investigations is attributed to the growing use of digital assets.
Digital Assets and Tax Evasion
The CI Unit stated that many of these investigations involve unreported income from capital gains, cryptocurrency mining, or income received in the form of cryptocurrency. Taxpayers are also evading payment by failing to disclose their ownership of digital assets. The IRS has been requiring taxpayers to report digital asset transactions since 2019.
Efforts to Combat Illicit Activities
While acknowledging that most people use cryptocurrency for legitimate purposes, the IRS recognizes the risks it poses in terms of financing terrorism and illicit activities like ransomware attacks. Since 2015, the IRS has seized over $10 billion in digital assets as part of its efforts to investigate crypto-related crimes. The agency is also proposing new regulations on brokers’ reporting requirements to prevent tax evasion.
Hot Take: IRS Cracks Down on Crypto Reporting
The IRS is intensifying its focus on digital asset reporting and investigating tax and financial crimes involving cryptocurrency. With an increase in cases and billions of dollars identified, it is clear that non-compliance with crypto tax laws is being closely scrutinized. Taxpayers must ensure they accurately report their digital asset transactions and income to avoid potential penalties or legal consequences. As cryptocurrencies continue to gain mainstream adoption, regulatory agencies like the IRS are stepping up their efforts to maintain compliance and combat illicit activities.