IRS Is Building Hundreds Of Cases On Crypto; Hires Aggressively
- The United States Internal Revenue Service is currently developing “hundreds” of cases related to investment in cryptocurrencies and the cases will soon be made public.
- As per a report citing division chief Jim Lee, the IRS will crack down on multiple cases and will target tax evasion in the crypto industry which has increased following the 2021 bull run.
- Moreover, in October, the IRS amended the rules for the upcoming tax season to incorporate a more expansive definition of taxpayers.
The United States Internal Revenue Service is reportedly working on “hundreds” of soon-to-be-public cases related to crypto.
A recent tax report published by Bloomberg, which cited division chief Jim Lee, claims that the IRS is developing multiple cases to target tax evasion in the crypto industry. These cases, according to the report, involve crypto-to-fiat “off-ramping” transactions and people receiving payments in cryptocurrency without declaring them as income.
Notably, the IRS now has the authority to summon M.Y. Safra Bank via a “John Doe” summons. As a result, the tax office was able to get information about the clients of SFOX, the bank’s partner and major crypto broker.
The news regarding soon-to-be-public cases against tax evaders comes after the regulator’s most recent effort to narrow tax loopholes. In October, the IRS amended the rules for the upcoming tax season to incorporate a more expansive definition of taxpayers.
The tax regulator differs from its prior guideline and changes “virtual assets” to “digital assets,” which now includes NFTs and virtual currencies in its 2022 recommendation for form 1040 filers. Notably, the revised draft by IRS defines digital assets as any digital representation of value recorded on cryptographically secure distributed ledger or any other equivalent technology.
Additionally, any asset that possesses characteristics of a digital asset will be regarded as such for federal income tax purposes under the new guidelines. The regulator now adds new areas for which taxpayers must provide an affirmative answer.
Moreover, an IRS official stated in March that cryptocurrency exchanges could “expect more” broad information requests from the agency.The IRS has made it very clear that it intends to significantly increase recruiting across the department. Lee stated that the tax authority anticipates a “more significant” recruitment increase for the rest of the financial year.
Additionally, the US government has increasingly made positive steps towards crypto regulation but there is a constant struggle between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), both of which are financial market regulations in the US. However, the SEC is in charge of regulating securities while CFTC is in charge of commodities.
SEC Chair Gary Gensler wants CFTC to regulate Bitcoin (BTC) as he considered it a commodity while he believes Ether (ETH) is not a commodity and should come under the SEC’s regulatory oversight. It is currently unclear what the official verdict of the struggle will be as the CFTC Chair Rostin Behnam believes ETH is also a commodity.
A crypto journalist with over 3 years of experience in DeFi, NFT, metaverse, etc. Parth has worked with major media outlets in the crypto and finance world and has gained experience and expertise in crypto culture after surviving bear and bull markets over the years.
