Scorpion and Frog? IRS Agent Wants Agency to Embrace Crypto
It’s such a positive thing to hear government agencies endorse the concept of cryptocurrency. And then there’s this. Coming from an IRS agent in charge of New York’s criminal investigation unit, it’s hard to tell if it’s a compliment or a threat.
If the agent is saying the IRS needs to stop treating crypto like it’s inherently morally suspect because of the privacy it offers, or that the IRS needs to offer much clearer, less onerous rules, then we agree. If he is saying the IRS shouldn’t treat crypto simultaneously like income when used for payments and an investment (with all the concomitant investment tax liabilities) when simply received for payment, we are supportive. But if “embracing crypto” and partnering with the industry means undermining privacy, requiring backdoor decryption or any other kind of intrusion, then that’s a horse of a different color.
Thomas Fattorusso, acting special agent-in-charge of the Internal Revenue Service-Criminal Investigation (IRS-CI)’s New York office, talked about cryptocurrency in an interview with The Wall Street Journal earlier this week.
“We can’t be hostile to the technology. We have to embrace it,” the IRS official emphasized, elaborating:
Cryptocurrency is here to stay. As far as I’m concerned, it isn’t going anywhere anytime soon and it’s becoming more legitimate. As the years roll on, it becomes more sophisticated.
Fattorusso explained that the IRS is looking to partner with crypto companies.
“My thought is that those relationships will develop as the years go on and [as] the companies become more comfortable with dealing with the federal government. I don’t see how we can operate in this space without it,” he opined.
Commenting on the IRS cooperating and partnering with crypto firms, Fattorusso shared:
That’s something that we’re always working toward … that’s always the end goal — to have those partnerships and to have a relationship that isn’t contentious, more of a symbiotic relationship.
He believes that partnering with federal agencies “helps them [crypto companies] in their legitimacy.” The IRS official added: “This is a new industry for everybody. I think we’re still trying to feel our way around it. The companies are feeling their way around it.”
In November last year, IRS Criminal Investigation chief Jim Lee said that the tax authority is building “hundreds” of crypto cases.