IRS Seeks Contractors to Improve Crypto Compliance

IRS Releases Sources Sought for Digital Asset Compliance

The Enterprise Digital Asset Initiative Project Office (DAIPO) of the Internal Revenue Service (IRS) is seeking information on potential solutions from companies to provide tools to enhance digital asset (cryptocurrency, stablecoins, NFT) tax compliance.

This follows the IRS plan released in April that indicated priorities for spending $80 billion in additional enforcement money provided by the Inflation Reduction Act, which included increasing enforcement related to digital assets.

Responses to the source sought are due to the IRS by July 12th.

Tools and Capabilities Sought by the IRS

The IRS is specifically looking for companies that can:

1. Identify digital asset transactions and transaction patterns, conduct bulk data analysis, calculate tax implications of digital asset activities, and evaluate and analyze digital asset transactions.
2. Supply digital asset pricing data (hourly, minute, second). Currently, the IRS relies on daily average pricing from public sources such as CoinMarketCap and investing.com.
3. Handle large-scale and/or bulk digital asset transactional data from digital asset platforms and/or other sources (e.g., peer-to-peer) for the purposes of bulk data analysis, risk scoring, and/or other blockchain analytics.
4. Offer digital asset gain/loss computation solutions on extensive data transaction sets that enable the IRS to efficiently scale and determine gains and/or losses.
5. Provide digital asset custody and management solutions that ensure secure, seamless, and automated processes to support asset seizure or recovery.

Spending on Digital Asset Compliance has Increased Rapidly

Several companies, including Deloitte, The Mitre Corporation, Accenture, Chainalysis, and AnChain.AI have ongoing contracts with the IRS for digital asset tracking and analysis. The U.S. Treasury's contractor spending on digital asset tracking and compliance has increased significantly over the past few years, reaching nearly $20 million in government fiscal year 2022, based on our analysis of public records. 

Department of Treasury Digital Asset Spending Trend

HigherGov Analysis

Justin Siken

Founder

Justin is the founder of HigherGov and specializes in government contracting and grant strategy, data, and market intelligence.

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