Head of Criminal Investigation Bureau of the National Tax Service: Decrease in Proportion of Cryptocurrency Money Laundering Cases, Yet Significant Issues Remain with Tax Evasion

The Internal Revenue Service (IRS) of the United States, in a recent teleconference and based on data from the annual report, has found that the nature of most cases has shifted from money laundering three years ago to tax evasion issues.

DeFi tax, stablecoin tax? Discussion on the IRS enforcing crypto taxes

More Than Half of Digital Asset Investigations Involve Tax Issues

The head of the criminal investigation division IRS-CI, Jim Lee, told Bloomberg that:

Three years ago, over 90% of cryptocurrency cases in investigations involved money laundering, but in the past year, about half of digital asset investigations involved tax issues.

Since the 2019 tax year, the IRS has been asking individuals to disclose whether they have engaged in cryptocurrency transactions, but apparently, this has not been sufficient to deter malicious tax evaders.

According to the IRS annual report, the cryptocurrency tax issues they have encountered include:

• Failing to report capital gains

• Failure to report mining income

• Refusal to disclose cryptocurrency holdings

The report also indicates that in over 2,600 investigations, the IRS uncovered tax and financial crimes amounting to $37.1 billion.

Jim Lee specifically emphasized the IRS's enforcement capabilities:

Most cryptocurrency users have legitimate intentions, and digital assets can promote financial innovation, but they can also facilitate money laundering, cybercrime, ransomware, drug trafficking, human trafficking, terrorism financing, and tax crimes. Cross-chain transactions make tracking actions difficult, but not impossible.

Did the IRS Play a Key Role in the Binance Settlement Case?

In November, Binance admitted to charges of money laundering, violating U.S. sanctions, and agreed to pay a $4.3 billion fine, with multiple government agencies involved in the settlement case, including the Department of Justice, the Treasury Department, and the Commodity Futures Trading Commission (CFTC).

However, according to Bloomberg, the IRS Criminal Investigation Division, which falls under the Treasury Department, also played a crucial role in this settlement case.

Binance founder Changpeng Zhao agreed to resign, plea bargain, and Binance was fined $4.3 billion