Enhanced IRS Enforcement in 2024 Aims to Combat Crypto Tax Evasion
The Chief of Criminal Investigation at the United States Internal Revenue Service (IRS), Guy Ficco, has disclosed that the regulatory body is preparing for an increase in cryptocurrency-related crimes. Speaking in an interview with CNBC at the Chainalysis Links event in New York, Ficco mentioned that there will be a surge in “Title 26 crypto cases” in 2024. This statement was made just days before April 15, which is the deadline for filing cryptocurrency taxes in the country.
Title 26 of the United States Code contains specific provisions aimed at tackling tax evasion. Tax evasion typically involves intentionally not paying or underpaying taxes through illegal means, such as underreporting income, inflating deductions, or concealing money and income offshore.
According to Ficco, cryptocurrencies were previously predominantly used as tools for various financial crimes like fraud, scams, and money laundering. He further noted that the IRS has recently observed an increase in “pure crypto tax crimes” and expects such activities to continue rising throughout the year. These crimes could involve not reporting income generated from cryptocurrency sales or hiding the true basis of cryptocurrencies.
To strengthen its efforts against cryptocurrency crimes, the IRS has formed partnerships with Chainalysis and other law enforcement agencies. Ficco emphasized that while IRS agents are skilled at tracking money, special tools are needed to navigate the cryptocurrency sector, which is where experts from Chainalysis come in.
Ficco also mentioned that the IRS has become more aggressive in investigating cases involving US residents who have failed to report their cryptocurrency taxes or have provided false information on their tax returns in the past. This statement follows a similar case in which a Texas citizen, Frank Richard Ahlgren III, was indicted by a federal grand jury on February 7 for filing false tax returns on over $4 million worth of Bitcoin gains.
Concerns about cryptocurrency taxes are not limited to the United States alone. Regulators worldwide have been actively working to refine taxation efforts for digital currencies. Recently, Japan’s ruling party, the Liberal Democratic Party, urged the government to swiftly implement crypto tax reforms. Moreover, in February 2024, South Korea’s Gyeonggi province implemented a new system to combat crypto tax evasion, successfully recovering $4.6 million in unpaid taxes from offenders.
In conclusion, the IRS is anticipating an increase in crypto crimes and has partnered with Chainalysis and other agencies to enhance its efforts. Tax evasion involving cryptocurrencies is becoming a growing concern globally, leading to efforts to refine taxation processes.
