The Internal Revenue Service (IRS) is enhancing its oversight of cryptocurrency transactions through the use of artificial intelligence (AI).
In a groundbreaking move, the IRS released a draft of Form 1099-DA for Digital Asset Proceeds From Broker Transactions, signaling a significant step forward in the enforcement of crypto tax compliance.
Concerns Rise as IRS Employs AI to Monitor Crypto Transactions
This development aligns with the agency’s proposed regulations introduced last year, aimed at refining the reporting of digital asset sales and exchanges by brokers. The regulations stipulate that beginning January 1, 2025, brokers, encompassing digital asset trading platforms and payment processors, must report these transactions to the IRS using the newly unveiled form.
Furthermore, the reporting requirements extend to real estate transactions, with relevant entities expected to disclose digital asset dispositions and fair market values in real estate dealings starting January 1, 2025.
In a separate but related revelation, the House Committee has initiated an inquiry into the IRS’s use of AI for scrutinizing Americans’ financial data, expressing concerns over potential infringements on civil liberties. The Committee, led by Chairman Jim Jordan (R-OH) and Rep. Harriet Hageman (R-WY), investigates allegations of the IRS deploying AI without proper legal procedures to monitor private transactions and financial accounts.
“However, recent reporting alleges that the IRS’s use of AI has also included actively monitoring American citizens’ bank accounts en masse and without legal process. Video footage obtained by an investigative media outlet appears to capture Alex Mena, an IRS official working in the agency’s Criminal Investigations Unit, admitting that the IRS has ‘a new system’ that uses AI to target ‘potential abusers’ by examining all returns, bank statements, and related financial information for ‘potential for fraud.’” the report states.
Additionally, this inquiry follows reports of IRS officials utilizing AI to target taxpayers’ bank accounts without warrants. These allegations, unveiled by investigative journalism, suggest the IRS can access bank data broadly, raising questions about privacy and the scope of governmental oversight.
In a significant move towards strengthening financial ties, Kuwait and the UAE have signed an agreement to prevent double taxation and tax evasion. The pact, signed at the 8th Arab Public Finance Forum
Press Release from Carey Olsen, Tuesday 21 January, 2025. Carey Olsen is pleased to announce that associate Shuting Zhao has joined the firm’s litigation, insolvency and restructuring team
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