Operation Hidden Treasure Officially Launched By IRS As Regulators Tighten Their Grasp On Crypto

Although cryptocurrency assets like Bitcoin, Cardano, Ethereum and so on continue to become increasingly popular and are even being widely accepted as a viable alternative to traditional assets, this has not changed that fact that numerous regulatory authorities around the world are still looking for ways to regulate and tax the new asset class, in addition to also punishing those crypto investors who fail to pay their taxes.

With that in mind, the IRS (Internal Revenue Service) has officially launched Operation Hidden Treasure, the goal of which is to clamp down on anyone investing in cryptocurrencies and not paying their taxes. It is also important to note that the IRS has only recently focused its attention towards cryptocurrencies, which has since resulted in a subtle alteration to the crypto-oriented inquiry on income tax returns that now asks citizens whether they disposed, bought, sold or exchanged any financial interest in the context of digital currencies.

What is Operation Hidden Treasure?

The IRS has introduced Operation Hidden Treasure in order to impose strict penalties on those who fail to report their income generated from investing in cryptocurrencies. On March 5th, 2021, Damon Rowe (the IRS Director of the Office of Fraud), announced the new initiative and said that it primarily aims to catch those taxpayers who attempt to conceal their crypto income regarding their respective tax returns.

With that in mind, in order to ensure that the operation is successful, the IRS has formed a task force composed of specialists and experts who have plenty of experience when it comes to the monitoring of various types of crypto-based income and revenue. Moreover, the IRS will also be collaborating with the agencys Criminal and Civil departments to further enforce crypto-related taxation laws.

How will the IRS go about it?

The aforementioned task force intends to address a common crypto tax evasion strategy which involves carrying out recurring financial transactions under $10,000 in order to avoid tax reporting obligations. Elsewhere, other tax evaders occasionally utilize shell companies to conceal their actual crypto income since they can help hide the identity of a companys owner, thereby allowing them to partake in different types of criminal activities without being discovered by the authorities.

Lastly, due to the fact that some cryptocurrency exchanges permit taxpayers to trade for items or various other digital assets without having to disclose their identities, Operation Hidden Treasure shall also look into crypto blockchain cloaking technology. Lastly, many expect the investigation to provide more options for tracing unreported cryptocurrency income via anonymous transactions going forward.