2020 has been a yr with loads of turmoil however regulators’ try and crackdown on cryptocurrency has not slowed down in any way (350,000 Aussie Crypto Users Are Receiving Tax Warning Letters, The IRS Is Hiring Consultants To Crack Down On Cryptocurrency Tax Evasion). A new listing posted on the federal government’s official contracting web site on June 30, 2020, reveals that the Legal Investigation Division (CID) of the IRS is hiring personal contractors to get extra visibility into privateness cash transactions utilized in illicit actions. In response to the request for information posted, the CID is searching for technological options that can assist hint privateness cash, layer 2 off-chain protocol networks, and aspect chains.
What Are Privateness Cash?
Privateness cash like Monero, Zcash, Sprint and others permit execution of absolutely nameless transactions. This in distinction to cryptocurrencies like Bitcoin, which are not anonymous. Privateness cash obtain various levels of anonymity by obfuscating the transacted quantity, pockets addresses, identification of each sender and receiver, and the transaction path. Full anonymity is typically abused for unlawful actions reminiscent of tax evasion, cash laundering, and different non-financial crimes. Nevertheless, it is very important notice that these capabilities are additionally utilized in completely authentic actions as effectively (e.g. nameless donations to charity, people who merely wish to transact anonymously, and so on.). Do not forget that money is also an nameless methodology of transacting used at scale day by day.
Primarily based on the RFI posted, IRS will use software program created by personal contractors to acquire extra data on suspicious exercise. The deadline to reply to this RFI is July 14, 2020 and personal contractors are inspired to submit bids by emails.
The language of the RFI means that the data is gathered to particularly seize illicit actions and/or check suspicious exercise already reported by numerous companies. Additionally, speculators who commerce privateness cash ought to report their features and losses for tax functions with out being underneath the misunderstanding that regulators is not going to learn about that exercise.
Disclaimer: this put up is informational solely and isn’t meant as tax recommendation. For tax recommendation, please seek the advice of a tax skilled.