The US Internal Revenue Service (IRS) has assembled a team of elite criminal agents to investigate whether cryptocurrencies, such as Bitcoin, Ethereum, Litecoin and Ripple, are being used to evade taxes. Chief of the IRS Criminal Investigation Division, Don Fort, revealed in a recent interview the addition of 10 new investigators to the Criminal Investigation Division. “It’s possible to use Bitcoin and other cryptocurrencies in the same fashion as foreign bank accounts to facilitate tax evasion,” he stated. In addition to investigating international tax compliance cases, the team will work with international criminal agencies to investigate unlicensed exchanges.
Bloomberg reports that due to budget cuts the Criminal Investigation Division has lost key staffers over the course of the past 6 years. With the addition of these new staff members the division will be brought back to full strength.
Most foreign countries have the expectation that citizens pay taxes on gains from virtual currency, so it is not surprising that the IRS is taking this aggressive approach. U.S government agencies are already well known for their thorough and far-reaching investigative skills. The Internal Revenue Service recently closed a successful investigation into U.S. assets concealed in Swiss bank accounts.
Companies such as Bitfury are collaborating with law enforcement to monitor blockchain activity and detect suspicious activity. Bitfury’s advisor, Jason Weinstein, a former DOJ investigator, stated: “Having a traceable public ledger of every bitcoin transaction ever conducted allows law enforcement to ‘follow the money’ in a way that would never be possible with cash.”
With its new team of elite investigators, and the rapidly growing range of blockchain tools available to them, users attempting to evade taxes at home or abroad can expect the IRS to track them down.
If you have issues with unreported gains from cryptocurrency, please contact Frost & Associates, LLC today at 410-497-5947.