The Internal Revenue Service (IRS) has increased its efforts to track down those who are attempting to avoid U.S. tax obligations through use of the blockchain. The agency is using the technology in two ways. First, the IRS is looking into those who use cryptocurrency to hide assets and second, the agency is looking to use the technology as a tool in the fight against tax evasion.
Step 1: Finding those who use cryptocurrency to hide assets
Popular sites like Coinbase may have seemed immune to the agency’s efforts, but anyone that is paying attention has noticed the IRS has ramped up its efforts.
These increased efforts include an extra ten agents assigned to the Criminal Investigation of the IRS to aid in this hunt. Although this increase will not result in the ability to chase down every taxpayer with cryptocurrency assets, efforts are increasing. As such, it is wise for those who are using cryptocurrency to take steps to ensure compliance with tax obligations.
Step 2: Using technology to hunt down tax evasion
The IRS is also looking to use blockchain technology to help find those who evade taxes outside cryptocurrency. The technology can allow the agency to track down funds and ensure taxpayers are meeting their obligations. Thailand’s Revenue Department recently announced it plans to employ blockchain technology to verify whether or not taxpayers paid their tax bill. The technology is expected to increase the agency’s ability to track down those who are thwarting their tax obligations and better ensure those who are attempting to evade tax obligations are found and prosecuted.