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On December 4, the Criminal Investigation (CI) Unit of the United Internal Revenue Service (IRS) reported an increase in the number of cases related to tax evasion through digital assets.

In a new annual report, the agency stated that it initiated more than 2,676 cases, with more than a half of the investigations of tax and financial crimes involving cryptocurrency in 2023.

IRS Witnessed An Increase In Crypto Tax Violations

In the 2023 fiscal year, the IRS investigated 2,676 cases against those who had violated the US tax and financial rules, totaling $37 billion. Most of those investigations were related to cryptocurrency.

Particularly, the agency specified that it had punished the individuals as follows:

• If they failed to report their capital gains from the scale of digital assets; 
• If their income came from mining cryptocurrency; 
• If they received earnings in the form of tokens from wages, renting, or gambling winnings.

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“CI is also seeing evasion of payment violations, where the taxpayer fails to disclose ownership of cryptocurrency in an attempt to shield holdings“, states the report. 

As the IRS officials say, such an increase is mostly driven by the overall increase in the use of cryptocurrencies.

Another regulator has also had a pretty good 2023 year. In the middle of November, the US Securities and Exchange Commission (SEC) reported that it had recovered $5 billion in the course of 784 enforcement actions. 

How IRS Started Combat Cryptocurrency Tax Evasion

The IRS agency began requiring US taxpayers to report on cryptocurrency transactions back in 2019. Then, the US Tax Administration adopted the relevant provision.

It is known that since the IRS started to investigate crypto-related crimes, it has confiscated more than $10 billion worth of digital assets. Only in 2021, it seized $3.5 billion, most of which had been obtained during the Silk Road case.

Earlier, the agency required the crypto exchange Kraken to report on 42,017 customers to know whether they are paying taxes. The IRS wants to specifically check those clients whose transactions exceeded $20,000 during the period from 2016 to 2020.