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Is blockchain the next tool to fight tax evasion?

On Behalf of | Nov 16, 2018 | Tax Audits

Technological advances can increase efficiency. One of the most recent examples is the internet. At first, the public and the government were unsure of how to use the internet. After some time, the internet became an integral part of our daily lives and government operations.

Some speculate that the blockchain may be the next internet.

What is blockchain? Blockchain is a decentralized and incorruptible ledger system. An individual or individuals working under the pseudonym Satoshi Nakamoto developed blockchain in 2008. The creator built the system to help address issues with duplicate spending happen in the cybercurrency market.

Each block contains unique information and is connected to the preceding block. The first showing the initial transaction, the second the following event and so on. This connection results in a chain — hence the term “blockchain.”

How likely is it that governments will use this technology to search for tax evasion? In short, very likely. Some countries are already doing so. A director-general of the Revenue Department in Thailand has stated his government will start using blockchain technology. The government will use this technology to verify whether taxpayers paid their tax obligations.

The United States could implement the technology in a similar manner. If so, it could result in increased targeting of audits for taxpayers who’s records of payment do not match up with expected tax obligations.

Those who are the subject of an audit can benefit from the legal counsel available with Goldburd McCone LLP. Our attorneys can use the details of your case to tailor a defensive strategy to your situation, better ensuring a successful outcome.