The United States Internal Revenue Service (IRS) is preparing for a significant increase in cases of crypto tax crime as the deadline for U.S. citizens to file their taxes approaches on April 15, according to IRS criminal investigation chief Guy Ficco. Ficco stated that his agency is expecting a surge in tax fraud and evasion cases related to cryptocurrency. He explained that crypto was previously used primarily in financial crimes such as fraud, scams, and money laundering, but there has been a noticeable rise in “pure crypto tax crimes” recently, and he anticipates even more in the future.
Ficco stated that these tax crimes could involve individuals not reporting income generated from crypto sales or concealing the true basis of their crypto assets. To combat this, the IRS has partnered with blockchain analysis firm Chainalysis and other law enforcement agencies to enhance their efforts against crypto crime. Ficco praised the expertise of Chainalysis in dealing with the tools and applications specific to the crypto world, complementing the tracing and money-following skills of IRS special agents.
In addition, Ficco provided some fundamental guidelines for individuals looking to file their taxes correctly and avoid any issues with the IRS. He emphasized the importance of knowing the basis of the asset and considering the point of disposition when selling it.
Ficco also mentioned that the IRS has become more aggressive in investigating and prosecuting U.S. citizens who have failed to report their crypto taxes in the past or have intentionally misrepresented information on their tax returns. As an example, he referred to the federal grand jury indictment of Frank Richard Ahlgren III from Texas, who was charged with filing false tax returns to avoid reporting over $4 million in Bitcoin gains.
In related news, a team of white hats called “SEAL 911” has been formed to combat real-time crypto hacks, aiming to protect the industry from cyber threats.