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  • Writer's pictureP Xenos and M Bacina

IRS identifies dozens of crypto cyber criminals

Updated: May 2

The criminal division of the Internal Revenue Service have identified “dozens” of potential tax evaders and cyber criminals within the crypto space after a meeting took place this week with tax authorities from five countries (including the US and Australia).

Officials from the U.S., U.K., Australia, Canada and the Netherlands make up the Joint Chiefs of Global Tax Enforcement (the J5), a task force with the objective of cross-sharing information as to potential tax evaders from each country, particularly those evading the payment of tax on profits from cryptocurrency trades.

Ryan Korner, a senior agent with the LA office of the IRS’s Criminal Investigations Office, recently indicated to reporters that the agency now has the tools to track the movements of cryptocurrencies, and that IRS’s cyber crime unit have developed a new-founded expertise in “who is moving the money and where it is going.”

Ryan Korner, said in a call with reporters on Friday that:

We have the tools in place that we didn’t have six months or a year ago.

The J5 said in a statement that:

Tax fraud is not a new crime, but the sophistication with which criminals commit tax fraud has significantly increased through cyber-related activities in recent years. Data breaches, intrusions, takeovers and compromises are the new tools that criminals use to commit tax crimes.

Earlier this year, the IRS set forth in preparing for a new wave of cryptocurrency audits amounting to 10,000 people, warning that they will most likely be subject to penalties for skirting taxes on their virtual investments.

This comes after the IRS released guidance last month informing virtual currency investors and their tax advisers how the agency expects them to report income from their holdings. Within the new guidance, the IRS requires taxpayers to track their crypto transactions in order to prove how much they bought, and subsequently determine how much they owe when they sell. An investor also must document transfers of coins between two accounts, known as wallets, to prove to the IRS that the transaction is tax-free.

Without budget numbers its unclear what the "cost to catch" each offender is to date, but if only "dozens" of offenders have been identified questions may well be asked about to what extent unlawful tax behaviour is even present in cryptocurrency transactions.


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