A recent report by the Treasury Inspector General for Tax Administration (TIGTA) uncovered significant failures within the IRS’s Criminal Investigation division (IRS-CI) concerning seized cryptocurrency.
Introduction to the Issue
As of late 2023, IRS-CI had custody of approximately $8 billion in digital assets associated with ongoing investigations. However, TIGTA's investigation identified significant gaps in how these assets were documented and managed.
Documentation Errors in Seizures
The report points out that the IRS-CI often did not follow its own procedures for documenting seizures, leading to missing or inaccurate records such as wallet addresses, transaction amounts, and seizure dates.
Asset Management Problems
Serious shortcomings also include seizure memoranda, which are official documents that should log the transfer of crypto assets into government-controlled wallets. TIGTA found that many seizures lacked these memoranda entirely, while others contained critical errors, including swapped wallet addresses.
Thus, the identified deficiencies in the documentation and management of seized assets raise concerns about the efficiency of IRS-CI and the need for improved internal processes.
