Cryptocurrency Tax Evaders Targeted By The Internal Revenue Servicebr>
The US Internal Revenue Service (IRS) has assigned a team of 10 elite criminal agents to hunt for cryptocurrency investors who evade taxes.
Don Fort, the chief of Criminal Investigation for the IRS, said that the promise of anonymity that has drawn money launderers and drug dealers to cryptocurrency is also attracting tax cheats. He added that the team will work with international criminal agencies to investigate unlicensed exchanges.
“It’s possible to use bitcoin and other cryptocurrencies in the same fashion as foreign bank accounts to facilitate tax evasion,” Fort said.
Commenting on the IRS move, Lisa Zarlenga, a tax attorney at Steptoe & Johnson, said the biggest challenge for the IRS is the blockchain, which is a new technology. She added that IRS need to “educate themselves on what is a blockchain, how do we learn what’s on the blockchain, and how do we follow it?”
The agency has been issuing notices to cryptocurrency investors as well as traders since 2014. It believes that cryptocurrencies can be considered as a security. Owing to this very reason, the tax on cryptocurrencies should be the same as that on securities.
In 2016, the IRS summoned cryptocurrency exchange Coinbase for data on US taxpayers. As a result, Coinbase had to disclose information on more than 14,000 users.