An Internal Revenue Service program to catch cryptocurrency tax cheats has recorded few achievements other than drumming up business for government contractors, the agency's inspector general found.
The program, dubbed “Operation Hidden Treasure,” was launched in 2021 with the goal of identifying people who omit crypto from their tax returns. However, the initiative has “lacked any enforcement deliverables,” the Treasury inspector general for tax administration wrote in a report last week.
“The primary purpose of the operation has been limited to the acquisition of data analytics tools and of software licenses and employee training,” the report said. The IRS’s civil office of fraud enforcement has acquired over 600 such licenses for agency employees but has no written records about the operation's results or effectiveness.
Since the 2020 fiscal year, the IRS has spent at least $47 million on contracts with so-called blockchain-analytics companies that specialize in tracing cryptocurrency transactions, according to federal procurement data. The largest such firm, Chainalysis, has received 81% of that money.