The United States Internal Revenue Service (IRS) is preparing for a notable increase in cases of crypto tax evasion as U.S. citizens approach the April 15 tax filing deadline. IRS criminal investigation chief Guy Ficco, speaking at the Chainalysis Links event in New York, noted that his agency is anticipating more instances of tax fraud and evasion related to cryptocurrencies.
“There’s going to be a lot more charged Title 26 crypto cases this year and moving forward.”
A Title 26 tax code refers to citizens who willfully evade paying taxes by lying or obfuscating their reporting documents.
Ficco explained that while crypto has previously been primarily used in financial crimes such as fraud, scams, and money laundering, the agency has recently observed a significant rise in “pure crypto tax crimes.” This includes cases of not reporting income generated from crypto sales or hiding the true basis of crypto assets.
To tackle these issues, the IRS has partnered with blockchain analysis firm Chainalysis and other law enforcement agencies to enhance their ability to combat crypto crime. Ficco praised his special agents for their ability to track and follow money, though highlighted the value of expert support from Chainalysis in the crypto world.
Ficco offered guidance for those filing taxes to avoid penalties from the IRS. He emphasised the importance of accurately reporting gains from the sale of crypto assets. For instance, if someone purchases an asset for $10,000 and sells it for $20,000, they must pay taxes on the $10,000 gain.
#IRS reminder: Quarterly estimated tax payment due April 15. Learn more: https://t.co/lCbHFj4O1K pic.twitter.com/6ikD4rlGKq
— IRS Tax Pros (@IRStaxpros) April 10, 2024
The IRS has become more assertive in investigating and prosecuting U.S. citizens who fail to report their crypto taxes accurately. On February 6, a federal grand jury indicted Texas resident Frank Richard Ahlgren III for filing false tax returns and failing to report gains of over $4 million made on Bitcoin.