IRS Strengthens Crypto Enforcement with Private-Sector Experts
The United States Internal Revenue Service (IRS) has recently hired two private-sector experts to assist in its efforts to enforce cryptocurrency regulations. Sulolit ‘Raj’ Mukherjee, JD, a former Global Head of Tax at a private blockchain software technology firm, and Seth Wilks, CPA, who has expertise in crypto asset tax policy, have been appointed as executive advisors by the IRS.
Bolstering Crypto Enforcement
IRS Commissioner Danny Werfel emphasizes the complexity of the rapidly growing crypto sector and the need to intensify enforcement for the sake of taxpayers and the country. He believes that bringing in expertise from the private sector is crucial in successfully building the agency’s efforts involving digital assets.
“This is a complex and evolving sector that has major tax administration implications… It’s important we get this right for taxpayers and the nation. Pulling in expertise from the private sector to work with the IRS team is critical to successfully building the agency’s efforts involving digital assets and helping us do it in a way that works well for everyone.”
IRS Deputy Commissioner Doug O’Donnell adds that hiring these experts will help the agency understand the crypto sector better and design systems for reporting cryptocurrency transactions. It will also improve employee capacity and access to tools in this rapidly evolving global landscape.
IRS versus Crypto
In 2022, the IRS launched ‘Operation Hidden Treasure’ as part of its crackdown on individuals who fail to report their crypto income on their tax returns. The operation aims to detect different types of digital asset income and involves a task force comprising experts from both civil and criminal departments of the Crypto Tax Fraud Enforcement.
Prior to this, the IRS made a slight change to the crypto-related question in its income tax returns. It asked applicants whether they had received, sold, exchanged, or disposed of any virtual currency during the reported year. This change was made just before the tax filing season closed on April 18, 2022.
Hot Take: Strengthening Crypto Enforcement for Tax Compliance
The hiring of private-sector experts by the IRS highlights the agency’s commitment to enforcing regulations in the rapidly growing cryptocurrency industry. Here’s why this development is significant for you:
Enhancing Expertise
By bringing in professionals with experience in blockchain technology and crypto asset tax policy, the IRS aims to better understand the complexities of the crypto sector. This will enable them to design effective systems for reporting cryptocurrency transactions and ensure compliance with tax regulations.
Protecting Taxpayers
The IRS’s efforts to intensify enforcement in the crypto space are driven by a desire to protect taxpayers and ensure a fair tax system. By cracking down on individuals who fail to report their crypto income, the agency aims to create a level playing field and prevent tax evasion.
Building Trust
By collaborating with private-sector experts, the IRS is taking a proactive approach to address the challenges posed by cryptocurrencies. This collaboration demonstrates the agency’s commitment to staying ahead of technological advancements and building trust among taxpayers.
Adapting to a Rapidly Evolving Landscape
The crypto industry is constantly evolving, presenting new challenges for regulators and tax authorities. By hiring experts who specialize in this field, the IRS is equipping itself with the necessary knowledge and tools to navigate this rapidly changing landscape.
Overall, the IRS’s decision to hire private-sector experts underscores its determination to enforce cryptocurrency regulations effectively. As a crypto enthusiast, it is essential to stay informed about these developments and ensure compliance with tax obligations.
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