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IRS criminal investigators ramp up crypto tax evasion cases

November 12, 2022

Right now, a lot of folks are thinking they should have been like Larry.

The Larry they wished they'd emulated is Larry David, known for his curmudgeonly television character. He tweaked that persona to become a naysayer on several inventions that, per the commercial's Super Bowl debut, changed the world.

The television ad for FTX crypto exchange advised viewers, "Don't be like Larry" and instead invest in digital currency via the company. On Friday, Nov. 11, FTX filed for bankruptcy following reports that between $1 billion to $2 billion of FTX customer funds disappeared.

Continuing crypto troubles: This is just the latest bobble in the digital currency bubble. Crypto peaked a year ago at more than $68,000. Now it's worth less than $18,000 and investors have lost more than $2 trillion since the 2021 high point.

Crypto-crashing_Libertex

But investors aren't the only ones taking a closer look at FTX and the entire crypto sector.

Members of Congress are talking hearings, the likelihood of which will depend on which party eventually, and nominally, controls the House and Senate after the midterm votes are all tallied.

The Securities and Exchange Commission and the Department of Justice also are reportedly investigating FTX for civil and criminal violations of securities laws.

Crypto tax evasion: Then there's the Internal Revenue Service.

Jim Lee, head of the IRS Criminal Investigation division, said during a press call last week that the agency's criminal investigative unit is building hundreds of crypto cases, with many to be made public soon.

Lee said that he's "really seen a shift" in recent years in digital asset investigations. Previously, most crypto cases were related to money-laundering. Now, tax cases make up about half the mix.

This IRS digital tax evasion effort from its criminal investigators earns this weekend's Saturday Shout Outs. They are —

The added crypto tax enforcement isn't a surprise. The main IRS has been stepping up crypto info and tax collection in recent years. This added attention from IRS-CI can only help.

You also might find these items of interest:

 

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TAX-SAVVY WAYS 
TO WRAP UP 2026

It’s over! With October’s extended filing deadline behind us, it is now time to focus on year-end moves to reduce your 2026 tax bill. 

You’ll find ways to do just that on the Tax Tips page (see the More Tax Posts drop-down menu at the top of the blog), as well as the separate tax tip pages for each month, notably October through December. If you’re on the Tax Tips page, you’ll find a monthly list at the end of this column. If you’re on another blog page, you can head straight to the October tips; at the bottom of that tips page you’ll find links to all the other 11 months’ collections of tax advice.

Not to spoil what you’ll find in that tax advice, but it does cover such things as tax deductions for charitable donations, investment moves that could reduce tax due, and ways to max out your tax-favored retirement savings. 

Finally, as the year winds down, things get hectic. There are lots of other things to occupy our time, like the much more fun upcoming holidays. But don’t lose sight of taxes, since timing is key. To be of use, most tax moves must be made by the end of the tax year. That’s Thursday, Dec. 31, which also is the last business day of the year. 

So that you don’t miss that final tax year deadline, also keep an eye on the countdown clock below. It will keep you on top of just how much time is left to make important, tax-saving moves. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

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