International Coalition Set to Tackle Cryptocurrency Tax Crime
In a bid to fight the threat of cryptocurrency tax crime, the United States Internal Revenue Service (IRS) has joined with tax authorities from Australia, Canada, the Netherlands and the United Kingdom to form the Joint Chiefs of Global Tax Enforcement (J5), according to a press release.
The J5 is a response to a request by the Organisation for Economic Co-operation and Development (OECD) for countries to do more to tackle tax evaders.
The new task force, which would work collaboratively with the OECD where appropriate, believes “offshore structures and financial instruments” when used to launder money and commit tax crimes could be detrimental to a country’s economic well-being.
The coalition, which includes the Australian Criminal Intelligence Commission (ACIC) and Australian Taxation Office (ATO), the Canada Revenue Agency (CRA), the Fiscale Inlichtingen- en Opsporingsdienst (FIOD) of the Netherlands, HM Revenue & Customs (HMRC) of the U.K., and the U.S. Internal Revenue Service Criminal Investigation (IRS-CI) will gather intelligence and “collaborate internationally to reduce the growing threat to tax administrations posed by cryptocurrencies and cybercrime.”
IRS Chief of Criminal Investigation Don Fort explained in a Forbes interview why the U.S. decided to take an international approach to fighting cryptocurrency-related tax crimes. He iterated that the U.S. has tried the one-man army approach in the past, but it wasn’t successful.
“We cannot continue to operate in the same ways we have in the past, siloing our information from the rest of the world while organized criminals and tax cheats manipulate the system and exploit vulnerabilities for their personal gain,” he remarked. With the J5 task force, Fort hopes the IRS will be strong enough to “pressurize the global criminal community” in ways it couldn’t make work in the past.
The U.K.’s Director of HMRC Fraud Investigation Service Simon York believes the J5 will make “the world smaller for those seeking to exploit our systems and ensuring no one is beyond our reach.”
At the first meeting of the group, leading tax and financial experts from the member states came together to develop tactical plans and identify new opportunities for pursuing international tax criminals.
The IRS has been concerned about cryptocurrency taxes since 2014, where it issued a cryptocurrency taxation guidance and announced it would treat bitcoin as a property. Early last year, it assembled a team of investigators to crack down on those who use cryptocurrency to launder money and evade taxes. In its efforts to catch American tax cheats, the IRS once ordered Coinbase to turn over records of over 480,000 users. After a protracted legal battle, which it lost, it reduced its requests to 14,000 users who engaged in trading activity above $20,000.