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.
The report states these digital asset investigations “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.”
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.”
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.
The report goes on to claim that cryptocurrencies “provide opportunities for responsible financial innovation,” they also continue to “fuel cybercrime.”
“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.
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.”
Read more on cryptonews.com
Coincidingly, the report claims cryptocurrencies pose a “risk of facilitating money laundering,