The IRS Focuses on Crypto Tax Evasion

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In just three years, the majority of cryptocurrency investigations have switched from money laundering to tax evasion, with about half now involving individuals failing to report their digital currency transactions to the IRS.

According to IRS data reported by Bloomberg, this surge in tax evasion cases related to cryptocurrencies is due to the failure of individuals to meet their tax obligations.

Jim Lee, head of the department’s crime division, highlighted the significant increase in cases related to cryptocurrency transactions and evasion of tax obligations to the state.

These investigations range from individuals not reporting capital gains or mining profits to not disclosing their holdings in digital currency. In 2019, the IRS began requiring individuals to report any transactions involving cryptocurrencies on their tax returns.

This has likely contributed to the rise in tax evasion cases related to cryptocurrency. In November, Binance reached a deal with authorities and paid $4.3 billion while its CEO, Changpeng Zhao, agreed to a $50 million fine and stepped down.

US Treasury Secretary Janet Yellen revealed that the organization had been under investigation by FinCEN, OFAC, and the IRS for three years.