The IRS has formed a 10-person team to work with international crime agencies to track down people who have been evading taxes on their cryptocurrency profits.
The US Internal Revenue Service (IRS) has assembled a team of 10 investigators for international crime investigations as well as for finding tax evaders who use cryptocurrency, Bloomberg reports Thursday, Feb. 8.
Chief of the IRS Criminal Investigation Division Don Fort said that the team will work with international criminal agencies to investigate unlicensed exchanges as well:
“It’s possible to use Bitcoin and other cryptocurrencies in the same fashion as foreign bank accounts to facilitate tax evasion.”
According to Fort, the group’s focus for now is on how crypto users change their fiat currency into crypto.
“We know that you want to get your money out at some point.”
In March 2014, the IRS began issuing guidance for the taxation of cryptocurrency, which they treated as a property that had capital gains or capital losses for tax purposes. However, only 802 people complied in filing their own cryptocurrency gains or losses for their taxes in 2015.
The IRS has faced hurdles this year trying to get access through a court order to user information on the crypto exchange Coinbase. Their original request for records of over 500,000 users was denied by courts and reduced to just 14,000 users that reportedly had high trading activity over $20,000.
Coinbase saw their partial victory as setting a precedent for the dealings between tax-enforcing government bodies and crypto exchanges that have a commitment to protecting user privacy.
A Cointelegraph expert blog published in Dec. 2017 brought up the possibility of a tax amnesty for those who failed to report gains from digital currency earning, similar to a IRS program for filing income from undisclosed offshore accounts.
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Author: Molly Jane Zuckerman