Two recent criminal tax cases, one involving cryptocurrency and the other not as much, show how digital assets are becoming part of the normal legal process for criminal tax enforcement.
The United States Department of Justice announced in April 2024 that Roger Keith Ver was indicted on fraud and tax-related charges, including mail fraud, tax evasion, and filing false tax returns. The indictment alleged that Ver, a former California resident who moved to St. Kitts and Nevis in 2014, hid assets and provided false information during the expatriation process to evade taxes, including an “exit tax” on his Bitcoin holdings. The indictment claimed that Ver sold tens of thousands of bitcoins without reporting or paying taxes on distributions from his U.S.-based companies, causing a $48 million loss to the IRS. The United States sought Ver’s extradition from Spain to stand trial. On December 3, 2024, Ver filed a motion to dismiss and on January 13, 2025 the government filed its opposition. This is one of the first glimpses into cryptocurrency enforcement where a friendlier regulatory and enforcement landscape has been promised.
On January 16, 2025, a Maryland attorney was indicted on charges including tax evasion and failure to file tax returns. The case involved transactions in cryptocurrency, which first appeared on the IRS Form 1040 in 2019 but was included in Schedule 1 for that tax return. The 2020 version of IRS Form 1040 moved the question to a much more prominent spot, right after entering your name and address. A similar question about whether taxpayers had interests in foreign bank accounts was also contained in a Schedule to the Form 1040 and subsequent litigation called into question whether the question was affirmatively not answered or just overlooked. For criminal tax cases, this makes proving the key attribute of willfulness more problematic. The Internal Revenue Service (IRS) decided to move the virtual currency question to its more conspicuous place on the return, presumably knowing about the previous problem with foreign bank accounts.
The trading of major cryptocurrencies increased dramatically in 2020, just as the individual tax return question on cryptocurrency transactions took its new prominent placement. Many more taxpayers now hold cryptocurrency investments as well. Therefore, this criminal tax charge may become more common in individual criminal tax cases. Whether this particular charge gets plead away among the more prominent charges remains to be seen. However, it will be interesting to see if the government tries to push this allegation as the criminal case proceeds or in any subsequent press releases for its deterrent effect on other taxpayers with cryptocurrency holdings.
