IRS Looking for Real Tax Crime in Virtual Reality
Criminals interacting and exchanging money in the metaverse aren’t safe from the IRS Criminal Investigation division, according to division Chief Jim Lee.
“Our team follows the money. We’ve been doing it for more than 100 years, and we’ve followed criminals into the dark web and now into the metaverse. Tax and other financial crimes know no borders,” Lee said in a release accompanying the November 3 release of CI’s annual report for fiscal 2022.
While there might not be consensus on how to define the metaverse, the virtual reality experience allows people to congregate, collaborate, and — most notably for CI — exchange various currencies, Lee said on a media call the same day.
All can agree that advancements in technology, like a virtual reality experience allowing people to interact through avatars, are a good thing, Lee said. But if there’s money involved in the interactions, “of course you’re going to see IRS CI special agents involved in the metaverse and tracking money in any form of medium, wherever it’s at,” he added.
CI has long promoted its presence in dark web illicit markets and once again touted its operations and successes in the latest annual report. The division has also been mining public social media data as an investigative source.
Armed and Dangerous
Lee reiterated his complaint about inappropriate and dangerous rhetoric regarding the IRS’s new funding under the Inflation Reduction Act (P.L. 117-169), which some claim will result in 87,000 new armed IRS agents.
In the whole of the IRS, only the 2,100 special agents at CI are armed, Lee said. That’s less than the full complement of CI’s 3,000 employees.
Asked if the rhetoric has had an effect on the dangers CI special agents face in the field, Lee said that there have been some incidents across law enforcement agencies and that the public can’t always differentiate between special agents from CI and those with agencies like the FBI or the Drug Enforcement Administration. Even though CI focuses on financial crime, that can still involve dangerous bad actors, he said.
CI Deputy Chief Guy Ficco said that while he didn’t have any figures, he has heard anecdotes suggesting CI special agents have faced increased tension in their contacts with the public.
More to Come
Lee noted his plan to hire 360 special agents in the coming year and added that he hopes to bring on 150 other CI employees as well. While the Inflation Reduction Act isn’t the only source of funding for CI, more hiring will remain the top priority, he said.
Given the trend of CI’s cryptocurrency case inventory more evenly balancing money laundering and tax investigations, a public announcement such as an indictment on a pure tax charge for dealings in digital assets is likely to appear soon, according to Lee. CI has hundreds of cases in its inventory involving tax misbehavior like failure to report wages paid in cryptocurrency, he said.
The Joint Chiefs of Global Tax Enforcement — a partnership of tax enforcement chiefs from the United States, the United Kingdom, Canada, the Netherlands, and Australia — is also preparing several public announcements or actions to be released soon, according to Lee.