Anticipated Surge in Cryptocurrency Tax Evasion Predicted by Head of IRS Investigation

The Internal Revenue Service (IRS) of the United States is anticipating a significant increase in cases of crypto tax crime as the deadline to file taxes approaches on April 15. In an interview with CNBC at the Chainalysis Links event in New York, Guy Ficco, the head of IRS criminal investigation, stated that his agency is preparing to tackle a rise in tax fraud and evasion cases related to cryptocurrencies. Under Title 26 of the tax code, individuals who deliberately evade paying taxes by providing false information or obscuring their reporting documents are classified as tax evaders. Ficco noted that while crypto has primarily been used for financial crimes such as fraud, scams, and money laundering, there has been a noticeable surge in “pure crypto tax crimes” recently, and he expects this trend to continue. He mentioned that the IRS has collaborated with Chainalysis, a blockchain analysis firm, and other law enforcement agencies to enhance their crackdown on crypto-related crimes. Ficco emphasized the importance of correctly reporting income generated from crypto sales and not concealing the true basis of crypto assets. He outlined some fundamental guidelines for filing taxes accurately to avoid any issues with the IRS. Additionally, Ficco stated that his agency has become more assertive in investigating and prosecuting U.S. citizens who have previously failed to report their crypto taxes or intentionally provided misleading information on their tax returns. In a recent case, a federal grand jury indicted a Texas man, Frank Richard Ahlgren III, for filing false tax returns and evading reporting requirements on gains worth over $4 million from Bitcoin.