- Operation Hidden Treasure is a new taskforce set up by the IRS to identify crypto tax avoiders
- The new taskforce will use blockchain specialists to identify ‘signatures’ that are indicative of tax avoidance
- The IRS has tried various means of getting crypto traders to file accurate tax returns and has seemingly decided to get serious about it
Are you hiding cryptocurrency profits from the Inland Revenue Service (IRS)? If so, you might find yourself the target of their new taskforce, Operation Hidden Treasure. Announced last week, Operation Hidden Treasure will target those it suspects of withholding their crypto earnings using a team of blockchain forensics specialists to identify cryptocurrency tax evasion signatures and pinpoint individuals who are not declaring crypto earnings on their tax returns.
Operation Hidden Treasure Seeking “Signatures” of Tax Avoidance
The issue of tax has long been a thorny one for cryptocurrency enthusiasts, with many objecting to the practice of taxation on an ideological level. However, this doesn’t exempt them from having to pay it, but a huge majority have chosen to do just that over the years. In retaliation, the IRS has taken various steps to get crypto traders to cough up, and it seems that they have finally decided to take a more aggressive stance.
Operation Hidden Treasure, which was revealed to Forbes last week, is all about “finding, tracing, and attributing crypto to U.S. Taxpayers” using a team of trained agents and specialist vendors to detect and identify “signatures” that tell the IRS who is avoiding their tax obligations.
These signatures include “structuring,” which is the age-old practice of sending big payments in segments in an attempt to stay below certain thresholds to prevent them being flagged, as well as the use of nominees and shell corporations to anonymize transactions. Operation Hidden Treasure agents hope that by using these methods they are able to “track, find, and work to seize crypto in “both a civil and a criminal setting.”
“Game Changer in Tax Enforcement”
Operation Hidden Treasure has been labeled a “game changer in tax enforcement”, which will be a worry to those who feel that the IRS guidance on cryptocurrencies is, at best, unclear. Nevertheless, the penalties are severe – even if the IRS decides not to pursue criminal charges against someone it suspects of tax evasion, the civil consequences for fraud can amount to a penalty of 75% of the understatement of tax.
It seems then that after years of, as the IRS would see it, trying to be nice in getting crypto profiteers to come forward with their earnings, with Operation Hidden Treasure they have officially turned nasty.
