Guglielmo Ficco, the Criminal Investigation Chief at the IRS, has highlighted a significant increase in cases of crypto-related tax evasion this tax season. In an interview at the Chainalysis Links event in New York, Ficco expressed concerns about the growing number of digital asset and crypto related tax crimes. He stated that the IRS is fully prepared to tackle tax evasions, particularly those related to crypto and virtual currencies. Ficco mentioned that crypto has been involved in IRS investigations for years, usually as part of larger fraud cases such as scams, embezzlements, and money laundering. However, he noted an uptick in pure crypto tax crimes, specifically federal income tax violations involving crypto.
Ficco emphasized that the IRS is bracing for more Title 26 crypto cases in the upcoming year, with tax violations such as not reporting income generated from crypto sales, hiding the true basis, or shielding the true basis in crypto becoming more prevalent. To enhance investigations into crypto tax evasion, the IRS has partnered with blockchain firms like Chainalysis. This collaboration provides crucial tools for analyzing complex crypto transactions and tracing financial flows. IRS agents are utilizing Chainalysis tools to address the opacity of crypto ownership, uncovering essential details for investigations and enabling more efficient detection and addressing of tax violations.
The partnership with Chainalysis and other tech firms is an integral part of the IRS’s strategy to combat crypto-related tax crimes. Ficco mentioned that crypto has played a significant role in some of the largest seizures ever conducted by the United States government, with the IRS Criminal Investigation division leading these efforts in recent years. The utilization of technology and collaboration with blockchain firms has allowed the IRS to improve its capabilities in identifying and addressing crypto tax evasion. The agency is focused on enhancing its investigative methods to ensure compliance with tax laws and prevent fraudulent activities involving digital assets.
As tax returns for 2023 are due on April 15, Ficco urged individuals to file electronically, emphasizing that it is easy, safe, and the most accurate way to file taxes. He highlighted the IRS’s efforts to streamline the filing process and avoid unnecessary paper processing delays. Ficco’s insights into the increase in crypto-related tax crimes and the IRS’s readiness to tackle such violations underscore the importance of compliance with tax laws, particularly in the evolving landscape of digital assets and cryptocurrencies. By leveraging technology and partnerships with blockchain firms, the IRS aims to enhance its capabilities in detecting and addressing tax evasion in the realm of crypto and virtual currencies.
