The IRS Cracks Down on Crypto Tax Evasion Surge
The Internal Revenue Service (IRS) crime unit, which played a pivotal role in the Binance Holdings Ltd. Investigation for money laundering and bank fraud, is witnessing a significant increase in cases related to crypto-related tax evasion. According to Jim Lee, chief of the IRS’s criminal investigation division, there has been a notable shift in the nature of crypto investigations over the past three years.
Previously dominated by money laundering cases, with over 90% falling under that category, the focus has now shifted, with approximately half of the recent digital-asset probes involving tax evasion. The issues being investigated include taxpayers neglecting to report income from capital gains and mining activities to individuals intentionally concealing their crypto holdings.
The surge in crypto tax evasion cases aligns with the IRS’s intensified efforts to tackle digital-asset tax cheats. Beginning with the 2019 tax year, individuals have been required to disclose their cryptocurrency transactions as part of a broader initiative to curb tax evasion related to crypto.
The IRS’s involvement extends beyond investigations, as evidenced by its role in major digital-asset seizures, including the record recovery of $3.6 billion worth of Bitcoin stolen during the 2016 hack of crypto exchange Bitfinex. As the crypto landscape evolves, the IRS remains at the forefront, ensuring compliance and accountability in the burgeoning world of digital assets.
Always consult with your CPA for personalized advice.
Honorine M. Campisi, CPA
