The IRS can track gift cards in some circumstances, yes. Gift cards are typically viewed as a type of income and, if they exceed a particular value, must be shown on the recipient’s tax return. Hence, the IRS can trace the gift card by looking at the tax return if the recipient of a gift card discloses it on their tax return.

The IRS is authorized to ask companies, financial institutions, and other sources of information in order to identify people who might be hiding income, including gift cards. As a result, if the IRS has reason to believe that an individual has received unreported income from gift cards, they may ask the gift card’s issuer for information or consult other sources in order to track the gift card and locate the beneficiary.