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- IRS updated crypto taxation guidelines in October 2022.
According to the reports of Bloomberg, The United States Internal Revenue Service(IRS) criminal investigation division is ready to crack down on tax evaders in the upcoming tax season.
Jim Lee, Chief IRS Criminal Investigation division, noted that the division is building “hundreds” of crypto cases, many of which will be made public soon.
Earlier, the agency was addressing issues like money laundering, but tax cases are increasing rapidly. In the last three years, Lee added that I’d seen a shift” in digital asset investigations.
The key area which needs to be focused on in this kind of case is “off-ramping” transactions; in the phase where digital assets are exchanged for fiat currency, at the same time, people are being paid for work in crypto and not reporting income on their taxes.
The IRS created the Office of Cyber and Forensic Services last year to combine its digital asset investigation, cybercrime investigation, digital forensics, and physical forensics support efforts into one cohesive unit. According to Lee, the office is capable of tracing any crypto transaction.
IRS established the Office of Cyber and Forensic Services in 2021 to combine its digital asset investigation, cybercrime investigation, digital forensic, and physical forensics under one unit. Lee said that the unit could trace any crypto transaction.
IRS published several reports on 3 November 2022 and mentioned in the report that around 2077, special officers of the units spent most of their time investigating crimes related to tax evasion and tax fraud, while the remaining time was spent tracing related cases to money laundering and drug trafficking.
The managing authority of the unit noted that money is nothing new, and they are ready to extend their inventions in new domains and protocols like Web3 and Metaverse. “We’ve been doing it for more than 100 years, he added. We’ve followed criminals into the dark web and the metaverse.”
In March 2022, this special unit of the IRS completed its investigation. It noted that Bitqyck founders Bruce Bise and Samuel Mendez had defrauded approximately 13k investors using a cryptocurrency scheme collecting around $24 million. And for committing a heinous offence, they were put behind bars.
According to Lee’s statement, it is noted that assets valued at $7 billion have been seized during the investigation, which is double the amount seized in 2021.
IRS Updated Crypto Taxation Guidelines
Earlier on 20 October 2022, TheCoinRepublic reported about the updated Guidelines on crypto Taxation in The U.S.
The U.S. Internal Revenue Service (IRS) added in its recent IRS 2022 Tax Year Guide that “Digital assets are any digital representations of the value recorded on a cryptographically secure distributed ledger or any similar technology. For example, digital assets include non-fungible tokens (NFTs) and virtual currencies, such as cryptocurrencies and stablecoins. If a particular asset has the characteristics of a digital asset, it will be treated as a digital asset for federal income tax purposes.”
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