Friday, February 5, 2021

Crypto Currency Not the Only Joint Tax Evasion Probes By IRS & J5

According to Law360, a coming criminal tax investigation coordinated among the U.S. and other countries won't necessarily limit its focus to cryptocurrency and the financial technology industry, the chief of the Internal Revenue Service's Criminal Investigation arm said Thursday.

A coming investigation by the five-nation Joint Chiefs of Global Tax Enforcement will concentrate on cryptocurrency and financial technology but will not be confined to those areas, an Internal Revenue Service official said Thursday. 

While the investigation will concentrate on tax evasion related to cryptocurrency and fintech, enforcement officials won't ignore any other findings that emerge, Jim Lee said during a virtual call with reporters. Known as the challenge, the investigation is the third of its kind from a collaborative tax enforcement effort that was formed in 2018 among five nations: the Netherlands, the U.S., the U.K., Canada and Australia.

Lee noted that this latest investigation will bring in experts from the five countries to develop leads for the organization, called the Joint Chiefs of Global Tax Enforcement, or J5. 

While These Experts Have Been Directed To Focus On Cryptocurrency and Fintech, 

"We're Not Going To Turn A Blind Eye To
Anything Else That Might Be Developed
When You Put Really Smart People In A Room
and Ask Them To Produce Results," He Said.

Lee noted that he'd seen people dealing with cryptocurrency, both domestically and internationally, who think that using the virtual currency makes them anonymous. But that's not the case, he said, citing results of previous J5 investigations.

"We're Out There," Lee Said. "We're Watching Everybody In This Space Internationally, And Domestically As Well."

The J5's first installment of the challenge focused on enablers of tax evasion, and the second phase focused on cryptocurrency, according to a statement from the IRS. As part of each phase, experts optimize data from the five countries, including offshore account information, to "make connections where current individual efforts would take years to make those same connections," the agency said.

Tax officials from the J5 countries declined Thursday to provide additional details about the organization's ongoing investigations.

The IRS announced in January 2020 what it called "the first major operational activity" by the J5. A series of investigations in multiple countries led to warrants and subpoenas issued to an unnamed financial institution in Central America, which was believed to be "facilitating money laundering and tax evasion for customers across the globe," according to the agency.

Investigators in IRS Criminal Investigation also worked on a case under the J5's umbrella involving the BitClub Network, a scheme that sought investor funds in return for shares of supposed cryptocurrency mining pools and rewarded investors for recruiting new investors, according to a statement in July.

In the years since the J5 was formed, the organization has seen departures by tax enforcement heads in Canada, the Netherlands and the U.S. Don Fort, then the chief of Criminal Investigation, told Law360 in September that despite these changes, the J5 had room to expand.

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