Regulators across the globe have been concerned over the tax evasion via cryptocurrencies. A recent report from the Internal Revenue Service (IRS), the national tax collection agency in the U.S., and the Internal Revenue Code administering agency has highlighted concerning figures in this regard.
Jim Lee, chief of the criminal investigation division (CI) of the IRS expressed his concern over the tax evasion by citizens using cryptocurrency. He mentioned that a trend is being noticed wherein cryptocurrencies are being exchanged for fiat currencies and people are failing to report payments in crypto.
Additionally, the law enforcement branch of CI is also planning to build hundreds of crypto cases that can be soon made public. The department’s investigation statistics currently are in contrast to the previous trend where most cases were of money laundering whereas, in the past 3 years, the cases have been more in digital asset investigations.
According to the department’s annual report, the agency in the past year has confiscated record amounts of data and cryptocurrency. CI seized an estimated sum of $7 billion in cryptocurrency in the fiscal year 2022, which started on October 1, 2021, and ended on September 30, 2022. The amounts seized this year were double the previous fiscal year.
Keeping this view in line, CI has prioritized training and deployment of cryptocurrency, blockchain, and open-source intelligence technologies to resolve complex cyber-financial criminal programs.
IRS also established the Office of Cyber and Forensic Services (CFS) in the previous year to make the investigation process more comprehensive. CFS aims to consolidate several areas of investigation including digital assets, cybercrime, digital forensics, and physical forensics, and prioritizes the facets involving the illegal use of digital assets for the exploitation of the country’s tax system.
Lee also advocated for the organization’s ability in tracking any crypto transaction and mentioned that whenever a government official takes a bribe, they look up ways for conversion. They often use a third party to move or launder illegal money by buying property, cryptocurrency, and other assets. In case of such funds move into or through the U.S. financial system, CI is capable of tracing the money.
Further, CFS is also advancing its efforts to evolve for the better and cover threats in decentralized finance (DeFi), peer-to-peer payments, and anonymity-enhanced cryptocurrencies.
