According to a recent Bloomberg Tax report, the United States Internal Revenue Service (IRS) criminal investigation division is preparing to crack down on cryptocurrency tax evaders during the upcoming tax season.
IRS Criminal Investigation Division Chief Jim Lee recently stated that the unit is working on “hundreds” of crypto cases, many of which will be made public in the near future.
IRS Shifts Focus To Crypto
Originally, the agency concentrated its investigations on issues such as money laundering, but tax cases have increased significantly and now account for roughly half of all investigations. “I’ve really seen a shift” in digital asset investigations over the past three years, according to Lee.
The main areas of focus in these cases are “off-ramping” trades, in which digital assets are exchanged for fiat currency, and people who are salaried in crypto but do not report that income on their taxes.
In a separate report issued on November 3, the IRS reported that in 2022, the division’s 2,077 special agents would spend nearly 70% of their time investigating tax-related crimes such as tax evasion and tax fraud. The remaining 30% was spent on cases involving money laundering and drug trafficking.
Following the money is nothing new, according to the division chief Lee, and the IRS is ready to pivot into new areas, including Web3, adding, “We’ve been doing it for more than 100 years, and we’ve followed criminals into the dark web and now into the metaverse.”
IRS Ramps UP Hiring And Processing
Last year, the IRS established the Office of Cyber and Forensic Services in an effort to consolidate its digital asset investigation, cybercrime investigation, digital forensics, and physical forensics support efforts into a single unit. According to Lee, the office can track any cryptocurrency transaction.
The agency’s Criminal Investigation division released its annual report on Thursday, detailing a number of its crypto successes, including the March 2022 tax evasion convictions of Bitqyck founders Bruce Bise and Samuel Mendez.
With the percentage of the population claiming to own cryptocurrency steadily increasing, regulatory bodies all over the world have increased their reporting requirements and enforcement actions. According to Lee, the IRS expects a “significant” increase in hiring throughout the remainder of the fiscal year.
Last month, crypto news came out that the IRS was prepping for mass hires in order to control what lawmakers called crypto’s “Wild West.” The IRS then estimated that it failed to collect approximately $50 billion in crypto taxes yearly.
 criminal investigation division is preparing to crack down on cryptocurrency tax evaders during the upcoming tax season.){kind=link}