According to its skeptics and the government, Bitcoin is many bad things: a medium of terrorist financing, a way to launder money, a method for those to subvert the fiat money system, and, arguably most importantly, a tool that tax avoiders can use to skirt their obligations.

The leading tax authority in the world, the Internal Revenue Service (IRS) of the United States, has acknowledged this. According to a slide deck obtained by a taxation professional that focuses on cryptocurrency, the agency will be renewing its attempts to ensure that this industry is properly regulated.

A Tax Evader’s Tool?

Unlike the United States Dollar or the Euro, Bitcoin is a non-sovereign form of money, as are a number of other digital assets. At least currently, that means there are no “banks of Bitcoin”, no taxes that you have to pay in it, or governmental agencies directly overseeing it.

Due to simple politics, this is obviously something that governments across the globe, especially their finance regulation arms, aren’t entirely amicable with. Because you know what they say, “follow the money”.

After announcing intentions to release new guidance and tools for U.S. cryptocurrency users, the IRS has begun to brief agents of its Criminal Investigation division on this asset class. Crypto Tax Girl, a professional that works in the industry, managed to get her hands on the 181-slide presentation, which outlines what virtual currencies are, how they can be used to skirt regulations, and how agents should catch those avoiding taxes.

I recently got hold of a presentation given to special agents in the IRS Criminal Investigation division that discussed investigating taxpayers who hold crypto. I went through all of the 181 horribly formatted slides (attached for reference haha) and here's what I learned… pic.twitter.com/YQqHVR5Dv7 — Crypto Tax Girl (@CryptoTaxGirl) July 8, 2019

According to her breakdown of the report, which can be found in the Twitter thread above, the IRS intends to allow its agents to use a number of techniques and tactics to target evaders. These techniques include interviews, “open-source searches”, electronic surveillance, social media scrutiny, and Grand Jury subpoenas.

Interestingly, the tax professional suggests that these subpoenas will not be served to crypto exchanges like before. Instead, the IRS slides mention involving technology giants with U.S. operations, namely Apple, Google, and Microsoft to inquire about those in question’s application download history.

It can be assumed that once they gather information about what crypto-related services one has downloaded, subpoenas can be extended to the companies behind said services. Crypto Tax Girl adds that IRS may also involve banks, credit card providers, and digital payment ecosystems like PayPal to see if there are transactions in affiliation with the usage of Bitcoin or other digital currencies. She concludes:

“There is a ton of other information in there about crypto in general, tracing transactions via the blockchain, limitations of the blockchain, etc. but what you need to know is that the IRS is working HARD to identify criminal tax cases involving cryptocurrency.”

Some Governments Are Crypto Friendly, Others Are Not

While the IRS is somewhat of a benchmark in tax enforcement, it is important to note that not all nations are entirely stringent. Case in point, Singapore’s Inland Revenue Authority (IRAS) revealed last week plans to exempt firms and individuals from having to pay goods and services tax (GST) on retail crypto transactions. A proposed guideline reads:

(i) The use of digital payment tokens as payment for goods or services will not give rise to a supply of those tokens (ii) The exchange of digital payment tokens for fiat currency or other digital payment tokens will be exempt from GST.

Of course, sales tax is different than capital gains and income tax, but Singapore’s recent announcement should set the tone for crypto involvement in the nation. Also, there is a Japanese politician, Takesi Fujimaki, that is looking to decrease taxes for cryptocurrency investors, who are currently subject to extremely high capital gains taxes in Japan.