Last week, it was uncovered that the IRS (United States’ Internal Revenue Service) is briefing its special agents in the IRS Criminal Investigation division on further investigation of possible cryptocurrency tax evaders.
I recently got hold of a presentation given to special agents in the IRS Criminal Investigation division that discussed investigating taxpayers who hold crypto.
I went through all of the 181 horribly formatted slides (attached for reference haha) and here’s what I learned… pic.twitter.com/YQqHVR5Dv7
— Crypto Tax Girl (@CryptoTaxGirl) July 8, 2019
The slides and 181 page full report were uncovered by @CryptoTaxGirl and contain an in-depth overview of different cryptocurrencies, how they work, how individuals acquire, trade, store, and sell cryptocurrencies. Within the report, @CryptoTaxGirl discovered that “[t]he IRS plans to use interviews, open-source searches, electronic surveillance, social media searches, and Grand Jury subpoenas given to a variety of companies” and will also be “serving them to Apple, Google, and Microsoft in order to search through taxpayers’ download history to see if they have ever downloaded cryptocurrency applications”.
She also discovered that the IRS will be searching and collecting data from bank, credit card, and Paypal records in addition to searching “Facebook, Twitter, and other social media platforms to find publicly available BTC and ETH addresses”. The report even goes into discussing cryptocurrency mixing as a way that individuals use to obscure their transactions. Nevertheless, the IRS specifically advised special agents to not alert those being investigated since that “may be detrimental to the seizure of any bitcoin balance”.
Increasing regulatory pressure
Regulators worrying about cryptocurrency is nothing new, but the rhetoric appears to be picking up the pace with governmental authorities issuing more remarks against cryptocurrencies, even the U.S President chimed in via Twitter. Then FinCEN has also been increasing its regulatory oversight by issuing new guidance for cryptocurrency actors and who qualifies as money transmitters. While the IRS wants to reduce cryptocurrency tax evaders, the IRS has still not updated their cryptocurrency tax reporting guidance since 2014, which still remains confusing to many tax professionals. However, there are rumors that an update is coming.
— RyAn DeCarmine (@inciteAmovement) July 15, 2019
Even more recently, U.S. Treasury Secretary, Steve Muchin, said that they are afraid that “Libra could be misused by money launders and and terrorist financiers” and that “cryptocurrency such as Bitcoin has been exploited to support billions of dollars of illicit activity like cybercrime, tax evasion, extortion, ransomeware, illicit drugs, human trafficking”. He then went on to call it a “national security issue” and called on for increase regulations to prevent cryptocurrency from being used in illicit activities.
Dash makes it easier for user compliance
While each user determines how they want to use blockchain technology, Dash has made it easier for those individuals that want to achieve regulatory compliance. Dash has partnered with Node 40 to help individuals comply with tax laws and more easily account their Dash transactions over time. The Node40 partnership has even helped other Dash partners, such as Alt36, with maintaining tax compliance. Dash also prioritizes its use in everyday transactions by focusing on merchant adoption, as seen in the 4800+ merchants listed on DiscoverDash, counter to the belief of many regulators that cryptocurrency is mostly used for illicit purposes.
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