The IRS is looking for ways to access digital wallets
US tax authorities want help accessing digital currency hardware wallets, Vice reported Thursday, April 29, citing a document posted on the agency’s website in March 2021.
IRS Criminal Investigation, the Internal Revenue Service’s Law Enforcement Division, and the Digital Forensic Unit are seeking contractors to devise methods to break into digital currency wallets.
A number of investors who hold digital currency keep their cryptographic keys on a personal device or an exchange they operate for transactions. On the other hand, some people want a little more security and exploit hardware wallets. They are small, tangible hard drives that securely store a user’s keys and are not tied to the web.
However, the security of hardware wallets poses a challenge for those looking into a case. Agencies may physically have a hardware wallet, but they may not have the ability to access it if the suspect is unwilling to help.
The IRS would also be looking for technologies that it can reliably use in different instances in the future, not tools or solutions that can only be used once.
“The explicit outcome of this contract is to tame cybersecurity research into measured, repeatable, and consistent digital forensics processes that can be trained and tracked in a digital forensics lab,” the document states, according to Vice.
The news comes as IRS Commissioner Charles Rettig told the Senate Finance Committee on Tuesday (April 13) that the country is failing to collect about $1 trillion in taxes a year due to the new popularity of digital currency. Cryptos are difficult for the agency to monitor and collect.
Non-fungible tokens (NFTs), Rettig said, are just one such issue for the agency.
“So now we have these non-fungible tokens, which are basically collectibles in the crypto world,” Rettig said, according to a published report. “These are not visible elements by design. The world of cryptography is not visible.