Guy Ficco, head of the IRS’s criminal investigations, told CNBC on April 12 that taxpayers are increasingly committing tax crimes involving crypto.
Ficco said the IRS has seen an increase in “pure crypto tax crimes” falling under Title 26 of the United States Code, including federal income tax violations.
Crimes considered pure tax crimes include failing to report income from cryptocurrency sales and concealing or shielding one’s actual basis in cryptocurrency.
The problem will likely persist. Ficco noted an “uptick” in tax reporting crimes and expects the IRS to file more charges this year and in the future.
Until recently, IRS investigations were primarily part of broader investigations into crypto crimes such as fraud and embezzlement.
Ficco acknowledged that crypto is “becoming more mainstream” and “will continue to play a greater role” in broader crimes such as phone scams, romance scams and pig slaughter. Crypto scams are distinct from tax reporting crimes.
Reporting failures is widespread
Ficco’s comments come after the IRS published a reminder that individuals must report taxes if they sell crypto, receive crypto as payment, or engage in other crypto transactions.
The IRS has implemented some form of tax reporting rules for crypto investors since at least 2014, but previous reports suggest that reporting errors remain high.
A 2023 report from Divly found that in the US, only 1.62% of investors paid taxes on crypto as required. US interest rates are only slightly above the global average of 0.53%.
The IRS’s enforcement efforts around crypto could become particularly strong starting this year. In February, the agency hired two experts to focus on crypto, and previous reports from CNBC suggest tax professionals are preparing for a “tidal wave” of scrutiny.
Ficco’s predecessor, Jim Lee, also suggested a greater focus on tax issues in December 2023. Lee said that half of then-active crypto investigations in 2023 were on tax issues.
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