Texas Man Arrested for Not Reporting Crypto Gains in Groundbreaking Case
What is believed to be the first criminal case for not reporting cryptocurrency capital gains to the Internal Revenue Service (IRS) has been initiated with the arrest of Frank Richard Ahlgren III of Austin, Texas.
Ahlgren is accused of failing to accurately report the sale of $4 million worth of bitcoin in which he had “substantial gains.”
According to prosecutors in the Western District of Texas, Ahlgren filed a false tax return in 2017, that inflated the price he originally paid for the bitcoin, to lessen his capital gain.
In 2018 and 2019, prosecutors say Ahlgren sold bitcoin for more than $650,000 and failed to report those sales at all.
Court documents say Ahlgren also sold bitcoin to an individual for cash, and then made a series of bank deposits in amounts of less than $10,000 each to avoid triggering currency transaction reporting requirements.
Ahlgren used some of his bitcoin proceeds to buy a home.
He is charged with filing false tax returns and structuring cash deposits to avoid those reporting requirements.
Historic Case
Don Fort, former chief of IRS Criminal Investigation (CI), wrote about the Ahlgren case on LinkedIn.
Fort wrote the case is groundbreaking because it “appears to be the very first legal source crypto tax case ever” as most of the crypto cases were previously focused on money laundering or illegal source tax cases.
“While the IRS continues to debate thresholds and reporting requirements for crypto, one thing not up for debate is the requirement to report capital gains,” wrote Fort, who’s now Chief Business Officer at IVIX.
Ahlgren faces a maximum of five years in prison for each structuring count and three years in prison for each false return count.
IRS CI and the Texas Office of Attorney General led the investigation.