IRS targets cryptocurrency tax dodgers
The IRS has announced a team of 10 investigators has been set up to crackdown on international crime investigations. It will also search for tax evaders who use cryptocurrency to hide funds, Bloomberg reported yesterday.
Don Fort, chief of the IRS Criminal Investigation Division the team will work alongside international criminal agencies to look into unlicensed cryptocurrency exchanges.
He said: “It’s possible to use Bitcoin and other cryptocurrencies in the same fashion as foreign bank accounts to facilitate tax evasion.”
The team wants to focus on people who change their fiat money into cryptocurrencies in order to hide income and avoid paying tax. And, although funds can be hard to detect once they’ve been put into cryptocurrency, sooner or later criminals who hide money this way will probably want to transfer back to fiat in order to withdraw.
“We know that you want to get your money out at some point,” summarized Fort.
Since March, 2014, the IRS has been giving guidance on cryptocurrencies and how to properly comply with taxation laws. The IRS does treat cryptocurrencies as properties that have capital gains or capital losses for tax purposes. 802 people filed capital gains on cryptocurrency gains or losses in 2015 so it’s fair to say not many are taking heed.
The US Senate are currently debating whether or not ICOs should be considered securities and, as such, be subject to SEC regulations. As more and more ICOs pop up with many of them raising millions of dollars, governments around the globe are looking to regulate more carefully and effectively.
This latest IRS move shows that the US government is not going to simply lay down and allow crypto traders to do as they please with no regard for the law of the land. China went a step further last year; they banned ICOs completely until proper channels of regulation can be established.