Regulatory Series on Cryptocurrencies: US IRS Grills Crypto Tax Evaders

Of late, the tax authorities have been constantly shedding light on crypto-taxation norms.

Recently, the British tax, payments and customs authority, Her Majesty’s Revenue and Customs (HMRC), has updated its cryptocurrency taxation guidelines for businesses and individuals. The U.K. government tax agency who administers taxes in conjunction with the fiscal policy making, have recently updated the tax guidance.

The Internal Revenue Service (IRS) is the agency entrusted for the tax collections and interrogating tax evaders, as the cryptocurrencies are to be treated as the assets tax computation.

This week, the IRS divulged their association with nations’ agencies to fix tax evasion from cryptocurrency users. The troop of five-countries, come together, which is known as the Joint Chiefs of Global Tax Enforcement or J5, that includes the Canada Revenue Agency (CRA), the Dutch Fiscale Inlichtingen- en Opsporingsdienst (FIOD), the British HM Revenue and Customs (HMRC), the Australian Criminal Intelligence Commission (ACIC) & Australian Taxation Office (ATO), and the American Internal Revenue Service Criminal Investigation (IRS-CI). 

IRS has been considering tax evasion very meticulously that stems from the cryptocurrency use and taking necessary control points to address this. A senior agent in the IRS’s Criminal Investigations office based in L.A., Ryan Korner, says “when digital currencies became popularized, the tax agency had issues keeping up with alleged tax evaders. However, the IRS has gained expertise when it comes to individuals moving the money, “we have tools in place that we didn’t have six months or a year ago,” Korner’s clarifications to reporters . 

The IRS came up with the more clarity on the latest draft tax form, in the recent past, that expects tax assesses to respond to the tax agency whether they have dealt with the digital currencies during the course of financial year or not. 

IRS Commissioner Charles Rettig stated: “I share your belief that taxpayers deserve clarity on basic issues related to the taxation of virtual currency transactions and have made it a priority of the IRS to issue guidance.”

The J5 now revealed that cyber-related activities tied to crimes like data breaches and ransomware are being used to commit tax evasion as well.