The agency that administers and enforces U.S. federal tax laws, the Internal Revenue Service (IRS) estimates that it could seize billions of dollars in cryptocurrency linked to tax fraud and other crimes in 2022, according to the agency’s Criminal Investigation (CI) unit.
During fiscal year 2021, which began Oct. 1, 2020, and ended Sept. 30, 2021, 93% of all CI seizures were crypto. The total sum was US$3.5 billion worth of crypto assets, according to an IRS criminal investigation annual report published on Thursday.
“The Cyber Crime Unit (CCU) focuses its efforts on multijurisdictional investigations posing the most significant threats to the U.S. tax and financial systems. These crimes almost always involve the use of crypto currencies to facilitate the criminal activity,” states the IRS annual report 2021.
This explains why in the past years the IRS’s criminal unit seized billions of dollars worth of Bitcoin and other virtual currencies linked to cases involving a range of criminal activities. “The bulk of this cryptocurrency came from Dark web marketplaces and was tied to illegal narcotics, computer fraud, illicit activities, and identity theft,” explains the report.
In the infrastructure package President Joe Biden signed into law on Monday, the U.S. Congress granted the IRS more ability to monitor cryptocurrency transactions, in order to better enforce U.S. federal tax laws. Crypto brokers will now have to track and report transactions to the IRS so the tax authorities can surveil virtual currency trades.
To further advance those efforts, the unit is opening an Advanced Collaboration & Data Center in Northern Virginia in 2022: “The focus of the center will be to bring together data, technology, and specialized personnel from across Treasury and government to work on high impact solutions to protect the integrity of our tax and financial systems.”
The IRS could also benefit from US$80 billion in funding that Democrats are proposing in Biden’s Build Back Better plan. The money is needed to hire 250 to 300 more special agents and invest in systems to identify and track cyber crimes.