The headline for this post, I'm sure, comes as no shock to anyone. In the United States, the IRS wants its slimy hand on every penny earned. So, of course, it wants to know if you own and are making money off Bitcoin.
What might comes as a shocker to some, is Bitcoin may not be all that its cracked up to be as far anonymity is concerned.
According to a contract recently obtained by the Daily Beast, the IRS can now track bitcoin and other cryptocurrency addresses. They can do this to route out potential tax evaders. They purchased software from the blockchain analysis group Chainalysis.
The document details that “criminals” have used digital currencies to launder money, deal drugs, and commit other unlawful behavior. However, criminals have also been using digital currencies to ignore tax liabilities and evade responsibility. The Daily Beast article elaborated:
The document highlights how law enforcement isn’t only concerned with criminals accumulating bitcoin from selling drugs or hacking targets, but also those who use the currency to hide wealth or avoid paying taxes.
Reason for IRS Crackdown; Tracking Bitcoiners
The reason the IRS is cracking down on digital currencies appears to be because only 802 people declared bitcoin profits or losses in 2015. The Daily Beast article suggests that many people may have not expected the IRS to collect on digital currencies. Others may have just thought they could easily sidestep this alleged obligation.
As a result of this failure to pay taxes, the IRS consulted with Chainalysis. They are now providing the IRS with tools to track bitcoin addresses through the blockchain and centralized exchanges. A Fortune article captured a screen shot of the letter:
The tool that Chainaylsis gave the IRS is called a refactor tool. It visualizes, tracks, and analysis transactions on the blockchain. Agencies from law enforcement, IRS, and banks will be able to use the tool, according to sources. To date, records show the IRS has paid Chainaylsis $88,700 since 2015 for its services.
Please head over to PFWnews.com to read Mac Slavo's full write up on this ...