Guy Ficco, the Criminal Investigation Chief at the Internal Revenue Service (IRS), has raised concerns about the increasing number of cases involving crypto-related tax evasion this tax season. Speaking at the Chainalysis Links event in New York, Ficco stated that the IRS is expecting a significant rise in digital asset and crypto-related tax crimes. He noted that the agency is fully prepared to tackle tax evasions, with a focus on pure crypto tax crimes involving federal income tax violations.
Ficco highlighted that crypto and virtual currencies have been part of IRS investigations for years, often as components of larger fraud cases such as scams, embezzlements, and money laundering. However, there has been a noticeable increase in cases involving pure crypto tax crimes, including failure to report income generated from crypto sales and hiding the true basis in crypto. Ficco anticipates more Title 26 crypto cases in the current year and beyond, emphasizing the need for enhanced enforcement measures.
The IRS is collaborating with blockchain firms like Chainalysis to boost investigations into crypto tax evasion. At the Chainalysis Links event, the agency showcased its partnership with tech firms to leverage tools for analyzing complex crypto transactions. This collaboration plays a crucial role in the IRS’s strategy to trace financial flows and address tax violations effectively. By utilizing Chainalysis tools, IRS agents can overcome the challenges of crypto ownership opacity and gather essential details for their investigations.
Ficco mentioned that crypto has played a significant role in some of the largest seizures conducted by the U.S. government, with the IRS Criminal Investigation division leading these efforts in recent years. The agency has seized substantial amounts of cryptocurrency involved in criminal activities, underscoring the importance of robust enforcement actions. Ficco’s remarks coincide with the deadline for tax returns for the year 2023, which is April 15, highlighting the urgency of addressing crypto-related tax evasion cases promptly.
The IRS has been proactive in addressing crypto tax crimes, leveraging technology and partnerships to enhance its enforcement capabilities. By collaborating with blockchain firms and utilizing tools like Chainalysis, the agency aims to improve its ability to trace financial flows and detect tax violations in the crypto space. This approach reflects the growing complexity of digital asset transactions and the need for specialized expertise to combat tax evasion effectively in this evolving landscape. As crypto continues to gain mainstream adoption, the IRS remains vigilant in enforcing tax compliance and pursuing individuals engaged in crypto-related tax crimes.
