Tax expert: New IRS funding will target the rich, crypto, and tech
WASHINGTON, DC - APRIL 07: Commissioner of the Internal Revenue Service (IRS) Charles Rettig testifies before the Senate Finance Committee on Capitol Hill, April 07, 2022 in Washington, DC. Rettig testified on the 2022 filing season and the President's proposed fiscal year 2023 budget request for the IRS. (Photo by Kevin Dietsch/Getty Images)
The IRS has been expanding its expertise in the asset class for virtual currency even though its crypto guidelines are still sparse. However, experts believe the new funding will heavily focus on this growing realm, too.
The agency’s focused intention should not come as a surprise to anyone. The IRS started asking taxpayers in 2020 about their virtual currency activity on the first page of Form 1040, the U.S. Individual tax return. This question comes right after name, address, and Social Security number; and before eligible dependents or income.
Cryptocurrency "is going to be a hot item,” Pon said.
IRS still uses 60-year-old technology
However, there is a considerable discrepancy between what the IRS wants and what it can have. The system that the IRS still uses today is nowhere near blockchain technology.
“I worked for the IRS in 1984 and I am sure they are still using the same antiquated computer system,” Pon said, “It was old even then."
In fact, the systems the agency uses to hold the records of individual and business taxpayer accounts "are the oldest major technology systems in the federal government," according to the 2021 report to Congress from the National Taxpayer Advocate (NTA).
Today, the IRS still uses the same technology from 60 years ago — a system called Individual Master File (IMF) that was mostly written in COBOL, a programming language created by IBM in the 1960s. The agency's approximately 60 case management systems generally are not interconnected, according to the NTA report, so employees must transcribe or input information from one system and mail or fax it to others.
Janet Yellen, U.S. Secretary of Treasury, has asked the IRS to create a modernization plan in six months, while Erin Collins, the National Taxpayer Advocate (NTA), has repeatedly pushed for technology upgrades. About $4.75 billion from the IRA is earmarked for tech modernization.
"Obsolete IT systems limit the functionality of online taxpayer accounts, prevent taxpayers from obtaining full details about the status of their cases, and prevent the IRS from selecting the best cases for compliance actions," according to the NTA report. "Although the IRS is making strides with its case management system, it still has a long way to go."
YES they have old systems but they are updating to new improved systems as i speak
