IRS seizes crypto assets to settle tax debts

The U.S. government treats digital assets as property that can be seized to settle tax debts. This was stated by Robert Uering, deputy assistant general counsel of the IRS, Bloomberg Law reports.

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“The taxpayer realises a profit or loss from the sale or exchange of virtual currency, which is his property. The agency will seize it and proceed with enforcement procedures,” the official said.

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In March 2021, the IRS launched the operation “Hidden Treasure” to identify residents concealing income from cryptocurrency transactions.

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In May, the U.S. District Court for the Northern District of California ordered the bitcoin exchange Kraken to provide the agency with information about all users who executed large trades in 2016-2020.

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On 1 April 2021 the IRS served a similar subpoena on the blockchain company Circle.

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The first target was Coinbase. In 2016 a court authorised the IRS to access the exchange’s customer data. The company sought to challenge the decision, but achieved only a relaxation of the requirements.

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Prior to that, the IRS issued a tender for a universal solution to crack hardware wallets, which could be of interest for investigations.

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