July 2023 Foodman Website
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On 6/23/23, the IRS issued a Request for Information (RFI) though its Enterprise Digital Asset Initiative Project Office (DAIPO) “specifically seeking to improve the use of data and technology to identify and address digital assets noncompliance”. The RFI is another indication that the IRS continues to invest in digital asset compliance that includes digital asset seizure and digital asset recovery.  According to the RFI, the IRS is looking for digital asset contractors to enhance an internal tool used by the IRS Large Business & International Division for improved digital asset pricing data that includes:

  • providing efficiencies to aid in compliance efforts to include identifying digital asset transactions and transaction patterns
  • providing bulk data analysis
  • computing tax consequences of digital asset activity
  • assessing and analyzing digital asset transactions
  • processing large scale and/or bulk digital asset transactional data from digital asset platforms, and/or other sources (peer-to-peer) for the purposes of bulk data analysis, risk scoring and/or other blockchain analytics.
  • digital asset gain and loss computation solutions on large data sets of digital asset transactions that will allow the IRS to efficiently scale and calculate gains and/or losses
  • digital asset custody and management solutions that provide secure, seamless, and automated processes to support asset seizure or recovery

As per the RFI’s Q & A, digital asset contractors need to know that:

  • They must be registered at SAM.gov to receive federal government contracts.
  • May be invited to participate in a short virtual one on one meeting with a panel of subject matter experts to further explore the information provided.
  • The RFI is issued solely for information and planning purposes only and shall not be construed as either a solicitation or an obligation on the part of the Government. It is not a solicitation for proposals, proposal abstracts or quotations. It is for market research purposes only.
  • This RFI seeks assistance in processing both large data sets and analyzing specific digital asset transactions.
  • This RFI seeks assistance to improve the use of data analysis to address noncompliance matters. The RFI seeks innovative solutions that are efficient, reliable and can assist in compliance efforts.
  • The IRS is interested in all solutions proposed including third-party software, analytics support and pricing data solutions.
  • The IRS is working to determine whether one vendor can provide all solutions or if multiple vendors/integrators may be required as part of this market research. All proposed solutions/solution sets will be assessed as part of the RFI analysis.
  • The IRS is seeking solutions in each subject noted in the RFI. The IRS will evaluate proposals across the entirety of the solutions sought.
  • The RFI seeks input on innovative solutions that can enhance the agency’s compliance and enforcement efforts. No determination has been made on integration requirements or platforms. The IRS is seeking industry input on best-in-class delivery methods for solutions that meet the stated requirements

Take Away

The IRS continues to invest in Digital Asset compliance as per the Inflation Reduction Act Strategic Operating Plan –  where it states that the Agency will pursue enforcement for complex, high-risk and emerging issues; including digital assets transactions. IRS reports in its Operating Plan that digital asset transactions have high risk for non-compliance. Hence why the IRS is seeking digital asset contractors. Despite the IRS’s resource limitations, the Agency reports that it will prioritize resources to increase enforcement activities, including criminal investigation as appropriate;  as well as improve non-compliance detection and identify trends and risks of digital asset transaction which is now evidenced by the recruitment of digital asset contactors.

Are you properly accounting your Digital assets? ©