In recent developments, Guy Ficco, the Criminal Investigation Chief at the Internal Revenue Service (IRS), has highlighted a marked increase in crypto-related tax evasion expected for this tax season. Speaking at the Chainalysis Links event in New York, as reported by CNBC, Ficco outlined the IRS’s growing concern over the escalating instances of digital asset and cryptocurrency-related tax violations.
Crypto and virtual currencies have long been on the radar of IRS investigations, typically entwined within larger cases of fraud encompassing scams, embezzlements, and money laundering activities. However, the landscape is shifting, as Ficco noted, with a noticeable rise in “pure crypto tax crimes.” These crimes involve clear violations of Title 26, which pertains to federal income tax laws, and include offenses such as failing to report income derived from cryptocurrency transactions or concealing the actual financial gains from such activities.
Looking ahead, Ficco anticipates a continued increase in cases labeled as Title 26 crypto violations throughout 2024. The IRS is poised to address these challenges head-on, leveraging its established partnerships with blockchain analytics firms like Chainalysis. This collaboration is pivotal, providing the IRS with sophisticated tools necessary for dissecting complex crypto transactions and illuminating the often opaque nature of crypto ownership.
During the Chainalysis Links event, the importance of these technological tools was underscored, emphasizing their role in enhancing the IRS’s capability to trace and scrutinize financial flows within the cryptosphere. By employing these advanced analytics, IRS agents are better equipped to uncover vital information that can lead to the successful identification and prosecution of tax evasion cases.
Furthermore, Ficco highlighted the significant role of cryptocurrency in some of the largest asset seizures ever executed by the U.S. government, with the IRS Criminal Investigation division at the forefront of these efforts in recent years. As tax returns for 2023 are due today, April 15, the timing of Ficco’s statements underscores the agency’s readiness and focus on curtailing crypto-related tax crimes as we move further into the year.
