IRS Teams Up With Chainalysis to Tax Bitcoin, Ethereum, and Litecoin in US Residents’ Crypto Portfolios

• The IRS is intensifying its efforts to combat tax evasion related to cryptocurrencies as the tax filing deadline nears.
• Chainalysis and other blockchain analytics firms play a crucial role in aiding the IRS by providing tools for tracking crypto asset ownership and transactions.

The IRS is enhancing its focus on cryptocurrency-related tax evasion, unveiled IRS Criminal Investigation Chief Guy Ficco at the recent Chainalysis Links event in New York. With the tax season in full swing, Ficco pointed out an anticipated rise in tax fraud cases linked to inadequate reporting of cryptocurrency transactions, as per a CNBC report. The move from traditional financial crimes to explicit tax violations marks a significant shift in the nature of crypto-related offenses.

During a discussion reported in a CNF YouTube video, Ficco elaborated on the IRS’s advanced capability to monitor and prosecute these crimes. This enhanced scrutiny is possible through partnerships with blockchain analytics companies like Chainalysis.

He stressed the importance of compliance, reminding taxpayers that all profits from cryptocurrency sales must be declared and taxed accordingly. His advice to taxpayers is clear—adhere strictly to reporting requirements to sidestep potential legal repercussions.

Ficco emphasized the critical role of public-private collaborations in tackling crypto-related crimes. Firms like Chainalysis are instrumental, providing essential tools and expertise that help trace crypto asset ownership and analyze transaction patterns. He commented,

Chainalysis, along with several other partners, have been very helpful to us and other law enforcement agencies in cracking the code on crypto crimes.

Furthermore, he highlighted the unique skill set within his team:

My IRS special agents, who predominantly all hold accounting degrees, are phenomenal at following the money trail. However, the tools and applications provided by our partners are vital for investigating crypto transactions, particularly those designed to obscure true ownership.

Ethereum (ETH) is currently trading at $3,258, experiencing a 7.41% increase over the past day, despite a 10.02% decline over the previous week. As reported in previous CNF report, this volatility underscores the importance of robust tax strategies and accurate reporting for U.S. residents managing portfolios containing Ethereum, Bitcoin, and Litecoin.