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The Criminal Investigation Division at the U.S. Internal Revenue Service (IRS) has turned its attention to the potential tax issues stemming from cryptocurrency kiosks and Bitcoin ATMs, Bloomberg Law reported.
Last month, the agency released new guidance in the form of a Revenue Ruling for tax reporting on cryptocurrency airdrops and hard forks. The objective was to help taxpayers understand reporting obligations for specific transactions that involve cryptocurrencies. The IRS has also updated its 1040 income tax form for the coming tax season to add a question on cryptocurrencies.
Speaking to Bloomberg Law, IRS Criminal Investigation Chief John Fort has now revealed that his team is cooperating with law enforcement agencies to monitor the illicit activity facilitated through crypto ATMs and kiosks.
“We’re looking at those, and the ones that may or may not be connected to bank accounts,” he said. “In other words, if you can walk in, put cash in and get bitcoin out, obviously we’re interested potentially in the person using the kiosk and what the source of the funds is, but also in the operators of the kiosks.”
According to Coin ATM Radar, there are 4,127 Bitcoin ATMs and tellers in the U.S. as of writing. Through these machines, users can exchange fiat currency for cryptocurrencies, such as bitcoin, for a fee. Highlighting the potential of such kiosks to be used by bad actors for money laundering purposes, Fort said:
“They’re required to abide by the same know-your-customer, anti-money laundering regulations, and we believe some have varying levels of adherence to those regulations,” adding that the IRS is “interested in looking at the compliance issues” related to the operators of the kiosks.
He further clarified that no public cases involving cryptocurrency kiosks and ATMs have been filed to date, but said that there are “open cases in inventory” relating to crypto tax issues.
Fort said that the agency is also focusing on crypto exchanges, both in the U.S. and overseas, saying, “We have concern that as things tighten up here in the U.S., that we are pushing people to foreign exchanges.”
