The IRS plans to interview family and friends, search through social media posts, and issue subpoenas to ensure people pay taxes on their Bitcoin, according to a presentation given to the IRS Criminal Investigation division. Top companies including Apple, Google, and Microsoft are also under the gamut of these investigations.
The IRS is going to great lengths to identify and prosecute cryptocurrency-facilitated tax crime. In a 181 slide presentation, James Daniels, the IRS-CI cyber crimes program manager, details the usage, ecosystem, and technology behind top cryptocurrencies (including Bitcoin, Ethereum, XRP, Bitcoin Cash, Litecoin, Stellar, and Monero).
What’s alarming are the recommendations provided to IRS agents for obtaining information from taxpayers.
Search and surveillance
IRS special agents are advised to conduct interviews, perform open-source searches, and use electronic surveillance to determine whether a taxpayer transacts in or maintains a balance of Bitcoin, according to the document.
The search doesn’t stop there. The IRS will pull personally identifiable information and public addresses posted to Facebook, Twitter, and other social media outlets.
What is your BTC wallet address?
I’ll send you $100 more of Bitcoin
Peter Schiff, a gold bug and BTC critic, identifying his ownership of a Bitcoin address.
For more difficult to obtain information, the presentation suggests obtaining Grand Jury subpoenas for bank, credit card, and PayPal records. It goes. The document even recommends interviewing the taxpayer’s friends and family, frequented businesses, and even their bank teller.
“Such as those who know the financial habits of the Subject, including, but not limited to, bank tellers, family and friends of the Subject (if feasible), and establishments the subject frequents that may accept bitcoins.”
Some of the largest companies may be subject to these searches, including audits of applications that have the potential to transact in cryptocurrency.
“However, one method that should be considered is serving Grand Jury Subpoenas to a variety of companies. Issuance of a Grand Jury Subpoena should be considered for Apple, Google, and Microsoft for the Subject’s complete application download history. Each application’s function should be explored to determine whether or not the application can transmit, or otherwise allow, transactions in bitcoin.”
There are also instructions for using block explorers to identify linked addresses and obtain the time and amounts of transactions.
“Once a Bitcoin Address is identified, it can be looked up on a Bitcoin Block Chain Explorer to find information such as value, transaction times, transaction locations, which may help in corroborating information, identifying additional addresses, or assist in locating the subject.”