The IRS’s Criminal Investigation (CI) Unit has reported a notable surge in tax probes related to digital currencies. The fiscal 2023 dossier reveals a meticulous scrutiny of undeclared crypto assets and unreported capital gains from their transactions.
The CI Unit has launched over 2,676 cases, unearthing financial discrepancies amounting to a staggering $37 billion linked to tax and fiscal delinquencies. The spotlight has been on unreported income from various cryptocurrency-related activities, including trading, mining, and even earnings received in crypto form, such as wages or rental income.
Jim Lee, the chief of CI, emphasized that while the majority engage with cryptocurrencies for lawful purposes, the anonymity of digital assets can also facilitate unlawful activities, including terrorism financing and ransomware assaults. Despite this, the IRS acknowledges the predominant legitimate use of digital currencies.
Since 2015, the IRS has been on the frontline, combatting tax evasion involving cryptocurrencies, resulting in the seizure of digital assets worth over $10 billion. The IRS’s steadfast commitment to transparency is further evidenced by the inclusion of a digital asset transaction question on tax forms since 2019, a move that underscores the government’s resolve to ensure compliance.
In response to these challenges, the IRS is proposing new regulations for brokers to fortify the reporting system and diminish tax evasion incidents. This initiative is a clear signal that the IRS is adapting and evolving with the financial landscape, ensuring that all taxpayers meet their obligations in the age of digital finance.
