Key Takeaways
- The IRS is preparing for an increase in cryptocurrency-related tax evasion cases this year;
- Guy Ficco, IRS criminal investigation chief, highlighted a shift from crypto being primarily associated with other financial crimes to being directly involved in tax evasion;
- The IRS is collaborating with Chainalysis and other firms to improve its tracking and prosecution of crypto tax crimes.
The United States Internal Revenue Service (IRS) is bracing for a surge in crypto-related tax evasion cases, according to the agency's criminal investigation chief, Guy Ficco.
The tax filing deadline is set for April 15.
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Ficco highlighted a shift in the pattern of crypto usage in financial crimes, noting a significant rise in cases involving "pure crypto tax crimes," such as not reporting income from crypto transactions or hiding the true basis of crypto assets.
The IRS is specifically preparing to address violations of Title 26 of the tax code, which deals with those who willfully avoid taxes by falsifying or hiding information in their financial reports. Ficco anticipates:
There’s going to be a lot more charged Title 26 crypto cases this year and going forward.
To bolster its efforts, the IRS has teamed up with blockchain analytics firm Chainalysis and several other partners to enhance its ability to prosecute crypto-related tax offenses. Ficco explained that such partnerships contribute essential tools and applications for his team of special agents to track and follow crypto.
Ficco also shared how to properly report taxes to avoid legal issues:
The basic rule of thumb is when you acquire an asset you have a basis in the asset. When you then dispose of that asset, <...> the point where you sold is your disposition. If you acquired something for $10,000 and sold it for $20,000, you have a $10,000 gain and that's what you need to pay tax on.
With the deadline for tax submissions upon us, US taxpayers involved in crypto transactions are urged to ensure they are fully transparent to avoid potential legal consequences.
In other regulation-related news, the Uniswap decentralized exchange has recently received a Wells notice from the SEC, signaling potential enforcement against the platform.
