IRS Prepares An Increase Of Hundreds Of Crypto Criminal Tax Cases

Although the Internal Revenue Service (IRS) has made no secret of its emphasis on cryptocurrency cases, the criminal investigation unit of the IRS has just announced that they are currently building hundreds of crypto criminal tax cases, many of which will soon be public.

IRS-CI Hones In On Cryptocurrency Tax Fraud

Division Chief Jim Lee of the IRS’s Criminal Investigation Branch (IRS-CI) continues to focus on prosecuting tax fraud cases that involve cryptocurrency transactions. Many of the hundreds of cases the division is now exploring involve “off-ramping” transactions, where digital assets are exchanged for cryptocurrency. Other cases are focused on situations where people are being paid with cryptocurrency that they are not reporting on their tax returns.

Although the IRS-CI was previously primarily focused on money laundering, cryptocurrency tax fraud cases are becoming more prevalent for the division. Last year, the IRS developed the Office of Cyber and Forensic Services to better address the investigation of digital assets and cybercrime, analyze digital forensics, and support physical forensics efforts. Division Chief Lee has indicated that the department now holds the capability to trace almost any cryptocurrency transaction.

Recent Cryptocurrency Investigation Success

The IRS-CI released its annual report earlier this month, in which they highlight several of its cryptocurrency fraud successes. Among their achievements include the largest financial seizure of cryptocurrency in US history. Additionally, the agency seized approximately $7 billion in cryptocurrency in the 2022 fiscal year, which is more than double the year prior. The agency boasts a conviction rate of over 90% for the tax fraud cases they investigate, a large percentage of which include cryptocurrency and digital currency transactions.

This announcement from the IRS-CI as they investigate hundreds of cryptocurrency criminal tax cases is serious business for individuals who have taken advantage of cryptocurrencies and hoped to be able to evade taxes. Cryptocurrency tax law continues to develop as the IRS-CI strengthens its focus on cryptocurrency-related tax crimes.

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