Crypto News

Crypto Tax Frauds on IRS Radar Amid Market Boom

As per the investigative unit of the IRS, there's been a major uptick in digital asset probes are around tax-related issues.

Published by

Bhushan Akolkar

Published 05 Dec, 2023 | 05:51:51 AM UTC

Crypto Tax Frauds on IRS Radar Amid Market Boom

A recent update from the Internal Revenue Service (IRS) crime unit reveals that its investigation unit, which played a pivotal role in the investigation of Binance Holdings Ltd., is currently witnessing a notable uptick in cases related to cryptocurrency tax evasion. Jim Lee, the chief of the IRS’s criminal investigation division, shared this information during a press briefing held on Monday, December 4.

Are Crypto Investors Evading Taxes?

Jim Lee highlighted a significant shift in the nature of crypto-related investigations over the past three years. In the past, the majority—over 90%—of active cryptocurrency investigations primarily focused on money laundering. However, in the last year, Lee noted that approximately half of the ongoing digital asset probes are around tax-related issues.

The investigations undertaken by the IRS criminal investigation division also encompass a spectrum of concerns. These range from instances where taxpayers neglect to report income arising from capital gains or mining activities to cases where individuals intentionally withhold information about their cryptocurrency holdings. Besides, the IRS has outlined the details of these investigations in the division’s latest annual report, which covers the period from October 1, 2022, through September 30.

Starting from the tax year 2019, the Internal Revenue Service (IRS) has mandated individuals to declare their cryptocurrency transactions. This directive is also a component of a broader initiative aimed at curbing tax evasion related to digital assets.

Regulators are taking crypto tax matters into their hands not only in the US but across the world. The United Kingdom’s tax agency, Her Majesty’s Revenue and Customs (HMRC), has issued a clear and decisive directive to users of cryptocurrency. On the other hand, Brazil is also looking to tax users for their crypto profits.

IRS Combating Crypto Crime

The IRS unit played a crucial role in the criminal case against Binance, the world’s largest digital-asset exchange. In the previous month, the company admitted guilt to charges of anti-money laundering and violations of US sanctions, resulting in a $4.3 billion settlement.

This extensive resolution encompassed various government entities such as the Justice Department, the Treasury Department, and the Commodity Futures Trading Commission, with the IRS operating as part of the Treasury Department.

Additionally, the IRS has actively participated in significant digital-asset seizures, including the remarkable recovery of $3.6 billion worth of Bitcoin stolen during the 2016 hack of the cryptocurrency exchange Bitfinex.

Bhushan Akolkar

Bhushan is a seasoned crypto writer with over eight years of experience spanning more than 10,000 contributions across multiple platforms like CoinGape, CoinSpeaker, Bitcoinist, Crypto News Flash, and others. Being a Fintech enthusiast, he loves reporting across Crypto, Blockchain, DeFi, Global Macros with a keen understanding in financial markets.   He is committed to continuous learning and stays motivated by sharing the knowledge he acquires. In his free time, Bhushan enjoys reading thriller fiction novels and occasionally explores his culinary skills. Bhushan has a bachelors degree in electronics engineering, however, his interest in finance and economics drives him to crypto and blockchain.

Published by

Bhushan Akolkar

Published 05 Dec, 2023 | 05:51:51 AM

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