Share this article
IRS Initiates ‘Operation Hidden Treasure’ to Root Out Unreported Crypto Income
“These transactions are not anonymous,” the IRS' national fraud counsel said. “We see you.”
By Daniel Kuhn
Updated Sep 14, 2021, 12:22 p.m. Published Mar 7, 2021, 8:22 p.m.
Make us preferred on Google
The U.S. Internal Revenue Service (IRS) appears to be stepping up its enforcement capabilities with a new program dedicated to cryptocurrency tax compliance.
STORY CONTINUES BELOW
Don't miss another story.Subscribe to the Crypto Daybook Americas Newsletter today. See all newsletters
With “Operation Hidden Treasure,” the IRS will search for unreported crypto-related income, according to Director of the Office of Fraud Enforcement Damon Rowe.
- Speaking at a Federal Bar Association virtual tax conference, Rowe said cryptocurrency fraud will be a priority. Forbes first reported the news.
- Operation Hidden Treasure, a joint effort between the IRS’ civil office of fraud enforcement and its criminal investigation unit, will train agents to look at blockchains to root out tax evasion among cryptocurrency users. It will exist as part of the office’s emerging threats mitigation team, Forbes said.
- IRS employees are also reportedly training alongside the European Union Agency for Law Enforcement Cooperation (Europol) as part of the initiative.
Carolyn Schenck, national fraud counsel in the IRS Office of Chief Counsel, told conference-goers the agency is working with private contractors and vendors, presumably blockchain analytics firms, to develop “signatures,” or telltale signs of fraudulent activity.
- These indicators include looking at those who structure transactions just below reporting requirements (like sending a series of $10,000 transactions), using shell corporations to hide funds as well as “getting on and off the chain,” Schenck reportedly said.
- The IRS has sent conflicting messages to U.S. crypto holders several times in the past. Most recently, an updated FAQ page indicated that investors who simply bought “virtual currency with real currency” would not have to report that transaction on this year’s tax returns.
- Still, cashing out crypto or making every-day purchases is typically seen as a taxable event. Operation Hidden Treasure is designed to find, trace, and attribute such transactions to taxpayers, Schenck said.
“These transactions are not anonymous,” she said. “We see you.”
Higit pang Para sa Iyo
More For You
Crypto custodian BitGo a potential acquisition target for Wall Street firms, analysts say
Compass Point and Canaccord call BitGo a potential acquisition target and defend the stock despite its weak debut, citing growth in institutional crypto infrastructure.
What to know:
- Wall Street analysts say BitGo’s expansion into full-service institutional crypto finance could drive long-term growth and make it an attractive acquisition target for traditional financial firms.
- Analysts argue that investors are overlooking BitGo’s potential to cross-sell prime brokerage-style services, which could significantly boost revenue if it can narrow the gap with rivals like Galaxy and Coinbase.
- Despite BitGo’s stock falling more than 40% since its January IPO, some analysts view the selloff as an overreaction and maintain buy ratings, citing the company’s solid competitive moat and strategic value to big banks entering crypto.
