Searching social media
Daniels’ presentation also suggested that the IRS request information from “those who know the financial habits of the subject, including, but not limited to, bank tellers, family and friends of the subject (if feasible), and establishments the subject frequents that may accept Bitcoins.” Social media accounts, such as Facebook and Twitter, also should be searched for public mentions of crypto-related information, as well as vendors that accept Bitcoin, the deck says. “A grand jury subpoena should also be considered for (and may already have been obtained during the normal course of the investigation) the subject’s financial accounts, including, but not limited to, the subject’s bank, credit card, and PayPal records,” the document goes on, for the further analysis of transactions. If it becomes clear that the subject of an investigation owns bitcoin, all wallet addresses and balances should be identified, Daniels wrote. If they use an exchange or online wallet service these companies can be subpoenaed for the user’s balance, addresses, and “any identifying information,” including “any linked financial accounts, login times and information, correspondence, and transaction details,” the slide deck says. However, the reliability of this approach “has yet to be extensively tested,” Daniels acknowledged. “As such, it may not be advised to send a subpoena for records if not critically necessary.” The taxpayers under investigation themselves shouldn’t be sent subpoenas, as this “may be detrimental to the seizure of any Bitcoin balance.” The IRS’s subpoena power applies in civil cases as well as criminal ones, noted Lisa Zarlenga, a partner at the law firm of Steptoe & Johnson. “While this presentation was given by the criminal investigation unit and clearly indicates that criminal investigation will use that tool, there is nothing preventing the civil side from using it as well,” she said. However, Zarlenga pointed out, the IRS is required to notify taxpayers before it subpoenas third parties, so people will likely know if the tax agency is looking for their bitcoin. The IRS is getting ready to issue new guidance on reporting crypto for tax purposes, the first to come out since an initial notice published in 2014. A number of questions on how exactly crypto should be taxed have come up since then, often with multiple possible ways to tackle them. This article was previously published on CoinDesk by Anna Baydakova.2019-25765 Tntdocs Ci-cyber… by on Scribd