IRS Expands Crypto Tax Enforcement with Broader Investigations
- The IRS has broadened its crypto compliance investigations from targeting specific groups to multiple exchanges.
- A Treasury Inspector General report indicates a potential non-compliance rate of 75% among crypto users identified through exchange data.
- The IRS’s enforcement push led to $3.5 billion in crypto seizures during fiscal year 2021, making up most of the agency’s total asset seizures.
- John Doe summonses have been used to target major exchanges like Coinbase, Kraken, and Poloniex for user transaction records.
- Upcoming changes include the introduction of the new Form 1099-DA reporting regime aimed at reducing reporting mismatches.
The IRS has significantly expanded its surveillance capabilities over cryptocurrency transactions since its initial focus on individual traders in 2017. This shift aims to identify tax non-compliance across multiple exchanges using advanced blockchain analytics and John Doe summonses.
With a reported potential non-compliance rate of 75%, the IRS’s broadened approach marks a pivotal change towards stricter enforcement in crypto taxation, impacting millions of users. (Source)
