Tax Fraud and Cryptocurrency

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Tax Fraud and Cryptocurrency

December 10, 2019

Tax Fraud and Cryptocurrency

The Internal Revenue Service just released its annual report, noting that the Criminal Investigation division identified $1.8 billion in tax fraud in 2019, with a conviction rate over 90 percent. The report also emphasized a focus on employment tax, cryptocurrency, and cybercrime.

Despite its seemingly high conviction rate, there is an overall downward trend for the Criminal Investigation division. Don Fort, the Criminal Investigation division chief, suggests that this is a result of retiring agents. With the large number of retirees every year and other funding issues, the IRS cannot keep up with hiring and training new agents. The Criminal Investigation division’s number of special agents is at a record low; the division has not seen this level of special agents since the 1970s.

However, the Criminal Investigation division is now in the position to take on more new agents. With more manpower, the division plans to use data analytics to investigate threats related to cryptocurrency and cybercrime.

Another current target area is employment tax. This is an area that the IRS as a whole, not just the Criminal Investigation division, intends to focus in on. According to Fort, “There is a tremendous amount of noncompliance in that area. It’s a huge part of what funds the federal government. We’ve absolutely made that a point of emphasis.”

The Criminal Investigation division has had recent success in collaborating with other agencies as well. For example, the Joint Chiefs of Global Tax Enforcement recently formed among the division and its counterparts in other countries to take on international tax evasion. The Criminal Investigation division also played a crucial role in the Welcome to Video case, the child exploitation case back in October. Because the website used bitcoin, the division was involved in tracking the cryptocurrency. Employment tax, cryptocurrency, and cybercrime are all areas that the Criminal Investigation division views as the upcoming year’s focal point.

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