The IRS confronts enforcement challenges as two digital asset directors resign during critical tax policy implementation, raising concerns about compliance gaps and DeFi oversight.
The IRS announced the resignations of digital asset enforcement directors Julie Foerster and Seth Wilks on 12 June 2024, coinciding with a $30M crypto tax fraud case unveiled by the DOJ three days later. Experts warn the leadership vacuum could undermine implementation of Treasury’s new broker reporting rules while DeFi transactions surge 18% this quarter.
Leadership Exodus Hits Crypto Oversight
The IRS confirmed the departures of Julie Foerster (Criminal Investigation Division) and Seth Wilks (Civil Enforcement) through its official portal on 12 June. Their exits follow Treasury’s 28 May proposal requiring crypto brokers to report transactions starting 2026 – a policy the Crypto Council for Innovation claims faces ‘operational hurdles’ due to staffing shortages.
Enforcement Lottery Emerges
With only 45% of crypto auditor positions filled according to FederalPay.org data, regional IRS offices show inconsistent monitoring. Shehan Chandrasekera, CPA at CoinTracker, notes: ‘We’re seeing 300% variance in audit rates between California and Texas districts. Bad actors could exploit these gaps until 2025 roadmap implementation.’
DeFi Complicates Compliance
Chainalysis reports 18% quarterly growth in decentralized exchange activity, complicating transaction tracking. Former IRS counsel Miles Fuller warns: ‘The 15 June DOJ case targeting $30M in crypto tax fraud proves existing tools struggle with cross-chain swaps and privacy coins.’
Historical Parallels in Tech Taxation
The current enforcement challenges echo early struggles with e-commerce taxation in the 2000s. When Amazon began collecting state sales taxes in 2012 after years of disputes, it required 18 months of IRS hiring surges. Similarly, the 2017 Bitcoin boom saw tax compliance rates below 35% according to GAO reports, only improving after 2019 guidance updates.
Path Forward Uncertain
While the Treasury maintains its 2026 timeline for broker rules, former SEC digital assets lead Valerie Szczepanik observes: ‘The 2021 infrastructure bill’s $800M funding for crypto enforcement remains largely unspent due to recruitment challenges – this leadership crisis could delay critical system upgrades needed for blockchain analytics.’
