Whistleblower primer: cyber-currency largest U.S. tax evasion tool in history

A few weeks ago, US prosecutors closed down currency operator Liberty Reserve for running one of the largest money laundering schemes ever uncovered, according to prosecutors. Virtual currencies are systems to allow anonymously transferred funds to be used as currency on the internet. What is it you ask? It is electronic money used for transactions with real goods and services and because they exist entirely within a virtual setting it is hard to tax the transactons. For example Bitcoin users can use the virtual currency to engage in real economic activity but as they are anonymous, they can evade taxes.Digital currency is electronic money that can be passed between individuals without the use of the traditional banking or money transfer system. Bitcoin, which has been embraced by a number of venture capitalists in Silicon Valley, exists through an open-source softwareΠprogram that any users with enough skill and computing power can access. It is not managed by a single company or government. Users can buy bitcoins through exchanges that convert real money into the virtual currency. The problem is that the unscrupulous have also found virtual currency and are using it to launder money and evade taxes within the US. The Government Accountability Office (GAO) has stated that the IRS must to more to investigate tax evasion using virtual money on line. Virtual money has now been deemed cyber-currency and it has resulted in misuse to hide unreported income from the IRS. Whistleblowers with unique or inside information about tax evasion through use of cyber funds can report this and may receive up to 30% of what the government recovers. Jeffrey Newman represents whistleblowers.