Monday, March 8, 2021



Key facts:

Traders who don't disclose their holdings could face criminal charges or fines.

The agency works with blockchain analytics firms to detect transactions.

The Internal Revenue Service of the United States (IRS) formed a special working group that will have the mission of reducing tax evasion with bitcoin (BTC) and cryptocurrencies. The entity activated the so-called "hidden treasure" operation that goes against operators who do not declare their profits or holdings of digital assets.

The unit is made up of agents trained in the tracking of cryptocurrencies and the services of blockchain analysis companies, according to a report published this Saturday, March 6 by Forbes. The department merged the functions of two IRS agencies: the Criminal Investigation Office and the Civil Anti-Fraud Office.

According to Carolyn Schenck, IRS National Fraud Advisor, the operation aims to "find, track, and attribute cryptocurrencies to US taxpayers." The IRS admitted that it is identifying transactions and linking them to traders.

"The IRS is analyzing blockchains and deanonymizing cryptocurrency transactions to be able to track, find and seize cryptocurrencies in a civil and criminal environment," the news outlet highlighted, citing Schenck. "We see you," she said.

The public body did not disclose with which blockchain analytics companies they are working to detect potential fraud with bitcoin, for example. Some companies that offer this type of service are: Chainalysis, Elliptic, CipherTrace or Coinbase.

What Schenck did report are the patterns they are looking for, within blockchains, to determine if there are suspicious transactions. This includes detecting recurring trades that are below $ 10,000, that is, just below the cap that a trade requires to be notified. They also go for users who use "shell" companies to hide funds or who "enter and leave the chain."

Consequences for not declaring bitcoins

Depending on each case, the failure of a person to declare the property or the earnings obtained with cryptocurrencies could lead to civil or criminal consequences. For the first case, there is talk of fines of up to 75% of undeclared taxes. In the second scenario, the user could face legal charges and, if found guilty, go to jail.

For the lawyer and tax specialist, Guinevere Moore, users should seek legal advice to know what the next steps are. Moore's suggestion is to communicate with lawyers and not with accountants since with the latter there is no principle of confidentiality. In addition, she stressed that when it comes to the IRS, do not "bury your head in the sand."

Although the IRS announced new measures to reduce tax fraud, the tax service has been tracking cryptocurrency operations since 2015, as reported by CriptoNoticias. This intensification sends a message to the operators to declare voluntarily and not due to external pressure.

In October 2020, this newspaper reported that the IRS would pay $ 1.25 million to companies Chainalysis and Integra FEC to track operations on the Monero network and the Bitcoin Lightning network. The foregoing shows that the body is taking more and more oversight actions so that Americans reveal their positions with bitcoin.