This is How the U.S. Taxman is Looking for Your Crypto
A set of slides allegedly prepared for agents working with criminal investigations in the Internal Revenue Service (IRS) – the tax authority in the U.S. – is shedding more light on how the government is going after crypto users who are suspected of engaging in tax evasion and other wrongdoing.
The slides were shared online on Monday by Laura Walter, a certified public accountant and cryptocurrency tax specialist, a.k.a. Crypto Tax Girl. According to Walter, she “recently got a hold” of the presentation and the corresponding notes, without giving any further details on how.
According to the document, the presentation has been prepared by James Daniels, a program manager at IRS-Criminal investigation. He was not available for immediate comment.
One of the sections of the presentation is dedicated to strategies law enforcement agencies use to find out if “a Subject transacts in or maintains a balance of bitcoins.”
According to the slide notes, “interviews, open source searches, and electronic surveillance” are the first methods that should be tried. However, it also adds that “serving Grand Jury Subpoenas to a variety of companies” can be an effective strategy for getting information.
Among the companies mentioned are “Apple, Google, and Microsoft,” with an aim of getting access to “the Subject’s complete application download history.”
“Each application’s function should be explored to determine whether or not the application can transmit, or otherwise allow, transactions in bitcoin,” the presentation notes further said.
In addition to the companies mentioned above, the presentation also said that a Grand Jury Subpoena can be used to get information from banks, credit cards, PayPal, and other financial accounts, in order to uncover if any transactions are related to cryptocurrencies.
“Vendors who accept bitcoin, such as Amazon Payments, can also be considered for Subpoena,” the notes further said.
When it comes to tracing bitcoin transactions, the presentation also went into some detail, suggesting IRS agents use services like Chainalysis to track transactions.
The presentation also explained that this blockchain analysis company is able to “map wallets into known clusters” on the Bitcoin network, such as wallets belonging to crypto exchanges and certain other large players.
As previously reported, the IRS is already hard at work with developing new crypto guidelines. Currently, at least three new crypto-related bills are reportedly being considered, which the agency hopes will “resolve some of the murky legal issues” related to token ownership, trading and business in the United States.”
Meanwhile, also as reported, the IRS is “turning its attention” to “recreational [cryptocurrency] investors.” The IRS appears to have appointed special agent Gary Alford as a senior auditor, as it targets non-compliers in what is increasingly looking like a forthcoming crypto tax crackdown. Alford is famous for shutting down the “Silk Road” online drug trafficking ring.