There is no arguing the fact that the U.S. Internal Revenue Service (IRS) will come for your neck once they find you are evading taxes. From Nicolas Cage to Wesley Snipes, Martha Stewart and Willie Nelson, it is clear that even fan favorites can come under the hammer of IRS.
Whilst tax evaders become more creative and tactical about masking their earnings, it is interesting to know how far IRS will go fishing out defaulters. A recently published slideshow by an IRS agent, James Daniels reveals some alarming recommendations on how crypto tax defaulters should be caught. Although the slideshow may not represent the stance of IRS, James Daniels is the program manager at IRS-CI cybercrimes. Such extreme measures from a manager are nothing to write home about.
The 181-page document starts by describing what cryptocurrencies are and chronicles paragraphs on several digital currencies including Bitcoin, Ripple, Bitcoin Cash and Stella, amongst others. Daniel proceeded to discuss other aspects of cryptocurrency such as failed projects, mining, and wallets.
The most alarming part of the report is Daniel’s recommendations on how agents can investigate the financial habits of individuals who are using cryptocurrencies to evade taxes. Firstly, Daniel recommends that a Grand Jury Subpoena should be issued to companies like Apple, Google, and Microsoft during the course of an investigation. This will give agents access to a subject’s download history. Upon finding a crypto app, agents will determine whether it allows for P2P or P2B transactions.
Bank accounts and credit card details ae not safe too, as IRS will be coming for that as well.
A Grand Jury Subpoena should also be considered for (and may already have been obtained during the normal course of the investigation) the Subject’s financial accounts, including, but not limited to, the Subject’s bank, credit card, and PayPal records. In the Subject’s bank and credit card accounts, ACHs and wire transfers should be identified to see if any of them are related to bitcoin or other TPEs.
Daniel also advocates that agents go through the social media accounts of subjects, establish contact with their friends and relatives, and even bank tellers, in order to get information on subjects.
US regulatory bodies have maintained a rather stringent stance on digital assets since its advent. US citizens are generally excluded from ICOs because of strict regulations. Evading tax is never the right thing to do. However, evading the privacy of individuals, who may otherwise be innocent isn’t either.