Patrick

<p>The Criminal Investigation Unit of the Internal Revenue Service (IRS:CI) noted an increase in digital asset tax investigations due to cryptocurrencies becoming more mainstream, according to the IRS:CI’s annual report released Monday.</p>
<h2 id="what-the-findings-show">What the findings show</h2>
<p><br> <a href="https://www.irs.gov/pub/irs-pdf/p3583.pdf" rel="noopener noreferrer nofollow">The report states these digital asset investigations</a> “consist of unreported income resulting from failure to report capital gains from the sale of cryptocurrency, income earned from mining cryptocurrency, or income received in the form of cryptocurrency, such as wages, rental income, and gambling winnings.”</p>
<p>Moreover, the Criminal Investigation Unit noted an increase in evasion of payment violations, wherein “the taxpayer fails to disclose ownership of cryptocurrency in an attempt to shield holdings.”&nbsp;</p>
<p>According to the report, the IRS:CI initiated over 1400 tax crime investigations in 2023 alone. Furthermore, they recommended 665 prosecutions, which resulted in 655 of those being sentenced.&nbsp;</p>
<h2 id="combating-cybercrime">Combating cybercrime</h2>
<p><br> The report goes on to claim that cryptocurrencies “provide opportunities for responsible financial innovation,” they also continue to “fuel cybercrime.”</p>
<p>“Cybercriminals continue to create more sophisticated hacks and schemes in an attempt to outsmart the law to steal and launder massive amounts of cryptocurrency,” the report reads in part.&nbsp;</p>
<p>In particular, the IRS:CI points out an increase in “pig butchering” scams targeting U.S. taxpayers, wherein scammers deceptively gain trust with a victim in order to exploit and gain control of their digital assets. The IRS:CI alleges the “highest identified loss” in one of these schemes was nearly $2 million, with average losses in “the hundreds of thousands of dollars.”</p>
<h2 id="keeping-bad-actors-at-bay">Keeping “bad actors” at bay</h2>
<p><br> Coincidingly, the report claims cryptocurrencies pose a “risk of facilitating money laundering, cybercrime and ransomware, narcotics and human trafficking, terrorism, and proliferation financing.”</p>
<p>The findings presented by the IRS:CI <a href="https://cryptonews.com/news/house-financial-services-subcommittee-on-digital-assets-tackles-hamas-illicit-assets.htm" rel="noopener noreferrer nofollow">follow terrorist group Hamas’ October 7th attack</a> which claimed the lives of 1200 Israelis. Israel has since launched counter-military measures in an attempt to combat Hamas, resulting in over 15,000 Palestinians killed.</p>
<p>According to BitOK, a financial audit company based out of Tel Aviv, Hamas received an estimated $41 million in crypto wallets between August 2021 and June 2023.</p>
<p>Last month, <a href="https://cryptonews.com/news/irs-holds-hearing-on-digital-asset-reporting-regulations-following-pushback.htm" rel="noopener noreferrer nofollow">the U.S. Senate and House each held hearings</a> to address <a href="https://cryptonews.com/news/senate-banking-committee-discusses-accountability-oversight-of-financial-regulators-in-tuesday-hearing.htm" rel="noopener noreferrer nofollow">regulatory</a><a href="https://cryptonews.com/news/senate-banking-committee-discusses-accountability-oversight-of-financial-regulators-in-tuesday-hearing.htm" rel="noopener noreferrer nofollow">&nbsp;issues surrounding the cryptocurrency industry</a>.</p>
<p>“We know that bad actors prey on vulnerabilities wherever they can find them,” said House Financial Services Committee Chairman Patrick McHenry. “There’s a bipartisan agreement, though, that we must hold these bad actors to account in every way possible and, specifically, when it comes to digital assets and the digital asset ecosystem.”</p>

IRS Reports Increase in Digital Asset Tax Investigations

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