The U.S. Internal Revenue Service (IRS) will crack down on digital currency tax evaders in 2021, its former division chief has warned. Dan Fort warned that the agency would shift from education to enforcement this year in a recent op-ed. Dan is the former head of the tax agency’s criminal investigations division. In his article on Law360, he cautioned that “a high-stakes game of chicken will move to the next level in 2021.” He believes that the IRS has been focusing on educating the public about digital currency taxation procedures.
IRS to turn its attention to crypto tax evaders.
According to the former chief, the Internal Revenue System has yet to turn its attention to enforcing these laws, with just a few digital currency tax-related prosecution cases. In most of these cases, the tax and money laundering violations “have been egregious.” This all changes in 2021, Fort believes. The transition from education to enforcement has already started, with the former taxman citing the recent Coinbase instance. He referred to the court order the IRS obtained in 2018 that forced the crypto exchange to hand over the data for 13,000 of its users.
Crypto regulations begin to tighten up in the U.S.
Since Facebook announced its cryptocurrency Libra, there has been widespread concern about crypto regulations in the United States. Financial regulators have constantly working on regulating the crypto industry. As reported earlier, the U.S. Treasury department FinCEN proposed new crypto wallet-related regulations that caused controversy as the crypto industry did not approve such proposed regulations. Several other countries are also looking to tax crypto gain. Dan Fort believes that the widening tax gap necessitates the IRS’s fresh focus on digital currencies. This is the difference between the tax that the Treasury Department expects and what it collects.