Two key directors working on crypto initiatives at the IRS have left their positions after accepting voluntary resignation offers, marking a significant loss for the agency in its approach to crypto taxation and enforcement.
Two key directors working on crypto initiatives at the Internal Revenue Service (IRS) have left their positions after accepting voluntary resignation offers, according to two people familiar with the situation.
The Background: A Voluntary Buyout Program
The IRS had launched a voluntary buyout program for federal employees earlier this year, offering deferred resignations to a wide array of federal employees. This move was seen as an effort by President ‘Donald Trump’s administration’ to reduce staffing costs and streamline operations.
The Departing Officials: Wilks and Mukherjee
Seth Wilks and Raj Mukherjee, both experienced professionals from the crypto industry, had joined the IRS Digital Asset Initiative in February 2024. Their roles were critical to helping the agency build a better approach to crypto taxation, including leading efforts on reporting, compliance, and enforcement programs for crypto.
Wilks, who was previously a vice president at TaxBit, served as the IRS’ executive director of digital asset strategy and development. Mukherjee, who was previously ‘ConsenSys and Binance.US’ head of tax’_, led the agency’s digital assets office.
The Work Done by Wilks and Mukherjee
During their tenure, Wilks and Mukherjee oversaw parts of the agency’s efforts to draft tax rules for the crypto industry. They worked on an updated 1099-DA tax form shared last summer to aid U.S. persons with filing taxes tied to digital asset transactions.
Crypto taxation refers to the process of taxing cryptocurrency transactions and holdings.
In most countries, cryptocurrency is considered a form of property, subject to capital gains tax.
Taxpayers must report their crypto income on their tax returns, including profits from buying and selling cryptocurrencies.
The Internal Revenue Service (IRS) in the US requires taxpayers to keep records of all crypto transactions, including dates, amounts, and exchange rates.
Failure to comply with crypto taxation laws can result in penalties and fines.
The IRS finalized one such rule, imposing certain data collection requirements on decentralized finance (DeFi) brokers, in the waning days of the former ‘Joe Biden administration’. However, this rule was overturned by Congress earlier this year under the Congressional Review Act in a joint resolution signed by Trump.
The Reason for Their Departure
While both officials had accepted voluntary buyout offers, their resignations came ahead of expected cuts to IRS staff. Over 20,000 IRS employees signed up for the deferred resignation program last month, with these employees being put on administrative leave through September.
The departure of Wilks and Mukherjee marks a significant loss for the IRS, which will need to reassess its approach to crypto taxation and enforcement in their absence.
The crypto industry has experienced rapid growth since its inception in 2008 with the launch of Bitcoin.
The market capitalization of cryptocurrencies has increased significantly, from under $1 billion in 2010 to over $2 trillion in 2021.
According to a report by CoinMarketCap, there are over 5,000 cryptocurrencies currently in existence.
The industry is driven by advancements in blockchain technology, which enables secure and transparent transactions.
As more countries begin to adopt cryptocurrency regulations, the industry is expected to continue growing.
