U.S. and Four Other Nations Launch Taskforce Against Crypto Tax Fraud

According to a recent announcement issued by the Internal Revenue Service (IRS) and quoted by blokt.com, the United States will partner with four other countries to up its fight against tax evasion committed using cryptocurrencies. Alongside taxation regulators in the U.K., Canada, Australia, and the Netherlands, the U.S. task force will work to "reduce the growing threat to tax administrations posed by cryptocurrencies and cybercrime [and] pressurize the global criminal community in ways we could not achieve on our own," per the report.

Joint Chiefs of Global Tax Enforcement

The new task force partnership across five countries will be known as the Joint Chiefs of Global Tax Enforcement, or J5. Two U.S. state organizations will be involved in its early stages: the IRS, and the Internal Revenue Service-Criminal Investigation (IRS-CI) unit. The IRS-CI has already been involved in increased efforts to combat cryptocurrency fraud. It recently launched a 10-person team specifically focused on ramping up these efforts.

Getting Ahead of Criminal Organizations

This is not the first time that U.S. authorities have worked to combat illegal cryptocurrency use. The government has already seen major crypto-crime fighting successes, including the efforts to jail Ross Ulbricht, founder of the Silk Road darknet market, and to prosecute backpage.com operators in a $1.5 billion money laundering operation. The J5 task force launch comes after the Organization for Economic Co-operation and Development (OECD), a consortium of more than 30 governments, put pressure on the international community to up its efforts to combat criminal use of cryptocurrencies.

The IRS pushed back against cryptocurrency investors during the most recent tax season. Earlier this year, the agency required that digital currency investors pay taxes beyond those mandated when they cash out their digital holdings for fiat money. Beyond that, items bought with digital currency are taxable as capital gains. While the position of the U.S. government on digital currency investments and taxation has solidified in recent years, it remains confusing for many investors. Nonetheless, it's likely that J5 will focus its efforts not on individual investors who may have difficulty catching up with the tax rules for digital currencies, but rather on larger criminal efforts to utilize cryptocurrencies for nefarious purposes.

Investing in cryptocurrencies and Initial Coin Offerings ("ICOs") is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns bitcoin and ripple.

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