The Justice Department has obtained what the former IRS Criminal Investigation division chief called perhaps the first legal-source cryptocurrency tax indictment.
On February 7 the Justice Department announced a seven-count indictment charging Texan Frank Richard Ahlgren III with filing false tax returns and structuring transactions based on his cryptocurrency transactions conducted from 2017 through 2019.
Ahlgren is charged with three counts of filing false tax returns under section 7206(1) for inflating the basis of 640 bitcoins he sold in 2017 to buy a $3.7 million house, and for failing to fully report at least five bitcoin sales on his 2018 and 2019 tax returns. He also faces four structuring charges for trying to avoid the currency reporting requirements when depositing some of the sale proceeds.
According to former CI Chief Don Fort, now with Kostelanetz LLP, the announcement appears to be of the first legal-source — meaning that the funds aren’t the proceeds of another crime — cryptocurrency tax case. “For years when I was the Chief of IRS Criminal Investigation, I was asked when we would see crypto cases that had tax charges associated with them? I knew it was only a matter of time,” he said February 7 in a post on LinkedIn.
Fort noted that most cryptocurrency cases coming out of CI have involved either money laundering or hiding income from other crimes.
Antivirus software entrepreneur John McAfee faced tax charges involving hiding unreported income using cryptocurrency before his death while disputing extradition from Spain.
“Today is a big day as we seem to have crossed the line to legal source tax cases. Richard Ahlgren III, of Austin, filed false tax returns that underreported or did not report the sale of $4 million worth of bitcoin in which he had... To continue reading please subscribe to NovaTax.
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