IRS to seize data from cryptocurrency exchanges, blockchain transactions

While the US government is busy with massive relief efforts, there seems to be no let-up for investors in the cryptocurrency space. The Internal Revenue Service (IRS) in the United States is stepping up its understanding of cryptocurrencies, seeking assistance from technology companies in the crypto software sector to obtain precise transaction data of taxpayers both on-chain and on cryptocurrency exchanges, in addition to capital gains tax obligations.

On May 12th this year, the IRS sent a Statement of Work (SOW) to the crypto tax service provider CryptoTrader.Tax, requesting assistance in combating tax evasion in the cryptocurrency space.

Exchanges, On-Chain Data Revealed

According to the Statement of Work (SOW), the Internal Revenue Service (IRS) in the United States is seeking to verify the accuracy of cryptocurrency income reported by taxpayers. They plan to obtain transaction data systematically through exchanges, wallets, API keys, blockchain data, and other source systems. IRS Deputy Commissioner John Cardone stated:

We are looking for software contractors to assist the tax agency in calculating gains and losses for taxpayers involved in virtual currency transactions. At least one company that prefers not to be named has also received our email (Statement of Work).

It is reported that the IRS may compare transaction data with tax returns, and if discrepancies are found, further communication or audits with taxpayers are expected. Those affected are likely to range from small taxpayers to experienced traders. The IRS seems quite adept at cryptocurrency transactions, as indicated in the Statement of Work:

Taxpayers involved in cryptocurrencies may have relatively simple transactions, but in some cases, thousands of cryptocurrency asset transactions can occur within a year.

IRS Continues to Enhance Cryptocurrency Knowledge

According to the contents of the Statement of Work, the level of professional terminology and understanding indicates that the IRS is fully aware of the intricacies of the cryptocurrency field. A clear understanding that exchanges and subpoenas are just the first step in combating cryptocurrency tax evasion, and the desire to comprehensively understand the tax situation of cryptocurrency users through software to advance to the next phase of work.

This is the latest action taken by the Internal Revenue Service (IRS) to more seamlessly monitor the cryptocurrency space. In response, David Kemmerer, CEO of CryptoTrader.Tax, stated:

I think the public certainly won't be happy with this news, but those who have consistently reported their taxes honestly don't need to worry too much.