IRS Reports Increase in Digital Asset Tax Investigations

The Criminal Investigation Unit of the IRS has reported a surge in investigations related to digital asset reporting, with over 2,676 cases initiated in the 2023 fiscal year. The investigations involve unreported income from cryptocurrency sales, mining, wages, rental income, and gambling winnings, as well as evasion of payment violations. The IRS has required US taxpayers to report on digital asset transactions since 2019 and has proposed new regulations on brokers' reporting requirements to combat tax evasion. While most people use cryptocurrency for legitimate purposes, digital assets pose a risk for financing terrorism, ransomware attacks, and other illicit activities, according to the CI chief.