IRS Already Tracking Bitcoin

August 25, 2017 Taxation in USA

bitcoin taxWASHINGTON D.C. – The IRS has spent years keeping track of Bitcoin movements to build a chain of evidence to catch money launderers.

New information released by the Inland Revenue Service through a Freedom of Information Act request has revealed that the tax authority has been tracking the seemingly anonymous use of Bitcoins since as early as 2017.

The information released shows that nearly 2 years ago the IRS paid for software which is able to analyse and track the movement of Bitcoins from one “wallet” to another.

The tracking allows the IRS to build a detailed history of transfers between various Bitcoin holders.

The information itself cannot be used to identify a Bitcoin holder directly.

However, when the Bitcoins are accepted by an entity which is bound by AML and KYC regulations, the IRS would be able to see the identity of the final holder.

Used in unison, the information would help build a clear picture of how tax evaders or criminals use the anonymous payment methods to transfer funds.

The hard-line approach taken by the IRS to cryptocurrency has been criticized by some experts who claim that the heavy-handed methods are pushing some users away from Bitcoin and towards digital currencies which are built with greater levels of anonymity in mind.