The IRS is now using data analytics and article intelligence to access billions of crypto transactions in the digital world and make the process more efficient for IRS Criminal Investigators. Once your cryptocurrency becomes fiat currency and once it goes into an exchange, the IRS is able to trace it. And the IRS is quickly evolving its crypto tracing capabilities. Additionally, the “J5” is a collaborative effort with other foreign taxing authorities (like Canada, the UK, Australia and the Netherlands) to openly exchange information and data to follow money trails, address various threats and develop analytic methodologies. Further, the IRS has already issued John Doe summonses to cryptocurrency exchanges like Coinbase and Kraken to disclose information about their anonymous users. It is clear that the IRS is more effectively data gathering with better analytic techniques to improve cryptocurrency tax compliance generally.
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