IRS Anticipates Surge in Crypto Tax Crime Cases

As the April 15 tax filing deadline approaches for U.S. citizens, the Internal Revenue Service (IRS) is bracing for a notable increase in crypto tax crime cases.

At the Chainalysis Links event in New York, Guy Ficco, head of IRS criminal investigations, spoke to CNBC, highlighting the agency's preparedness to tackle a surge in tax fraud and evasion cases.

IRS Gears Up for Crypto Tax Crime Spike

Ficco noted a rise in cases falling under Title 26 of the tax code, involving individuals intentionally evading taxes through misrepresentation or concealment in their tax filings.

While crypto has historically been associated with financial crimes like fraud and money laundering, Ficco highlighted a recent surge in "pure crypto tax crimes," such as failure to report income from crypto sales and concealing the true basis of crypto assets.

Increased Focus on Pure Crypto Tax Crimes

Collaborating with blockchain analysis firm Chainalysis and other law enforcement agencies, the IRS aims to enhance its capabilities in combating crypto-related crimes.

Ficco emphasised the importance of understanding the basic principles for accurate tax filing, advising taxpayers to determine their asset basis and report gains accordingly.

Basic Tax Filing Guidelines

For instance, if an individual purchases an asset at $10,000 and sells it for $20,000, the gain of $10,000 is subject to taxation.

The IRS has adopted a more assertive approach in investigating and prosecuting individuals who have either neglected to report crypto taxes or deliberately misrepresented information in their tax returns.

Recently, on Feb. 6, a federal grand jury indicted Frank Richard Ahlgren III from Texas for allegedly filing false tax returns, evading reporting requirements on over $4 million in Bitcoin gains.