by Fresh Start Tax | Jul 30, 2019 | Tax Help
The Internal Revenue Service is warning more than 10,000 holders of cryptocurrency that they may be subject to penalties for skirting taxes on their virtual investments.
We are staffed with tax attorneys, lawyers, CPA’s, former IRS Agent and Managers who know IRS inside and out.
IRS is on the Loose
The IRS has begun sending letters to taxpayers who potentially failed to report income and pay taxes on cryptocurrency transactions, the agency said Friday. The IRS said it obtained the names of the taxpayers through “various ongoing IRS compliance efforts.”
The letters, which the agency began sending last week, represent one of the IRS’s broadest attempts to-date to rein in tax avoidance on virtual currency transactions. The IRS has struggled to enforce tax laws on digital currencies in recent years as crypto investments have gained popularity and value.
Last year, the IRS’s audit division identified cryptocurrencies as one of five areas where taxpayers could easily avoid taxes. IRS Criminal Investigations head Don Fort has said the agency will soon announce criminal tax evasion cases involving digital currencies.
Voluntary Disclosure
Taxpayers who receive the letters “generally won’t be eligible” for an IRS voluntary disclosure program, where taxpayers can come forward with undisclosed financial accounts in exchange for the potential to reduce penalties or avoid criminal prosecution.
However, taxpayers who haven’t been notified by the IRS and may have underpaid or avoided taxes for cryptocurrency transactions still could seek some relief by coming forward before the IRS finds them, she said. The IRS said all letters will be sent by the end of August.
The IRS in 2014 classified all virtual currencies as property for tax purposes, meaning the assets — much like a home — can be sold at a profit and trigger tax implications.
The agency served a summons against digital currency exchange Coinbase, seeking details about customers who traded digital currencies from 2013 to 2015.
Treasury Secretary Steven Mnuchin said on Wednesday that U.S. regulators are likely to soon issue new regulations on cryptocurrencies, so they don’t negatively impact the financial system.
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by Fresh Start Tax | Jul 30, 2019 | Tax Help
Income from virtual currency transactions is reportable on their income tax returns.
Virtual currency transactions are taxable by law just like transactions in any other property.
The IRS has issued guidance in IRS Notice 2014-21 for use by taxpayers and their return preparers that addresses transactions in virtual currency, also known as digital currency.
Taxpayers who do not properly report the income tax consequences of virtual currency transactions can be audited for those transactions and, when appropriate, can be liable for penalties and interest.
In more extreme situations, taxpayers could be subject to criminal prosecution for failing to properly report the income tax consequences of virtual currency transactions.
Criminal charges could include tax evasion and filing a false tax return. Anyone convicted of tax evasion is subject to a prison term of up to five years and a fine of up to $250,000. Anyone convicted of filing a false return is subject to a prison term of up to three years and a fine of up to $250,000.
Virtual currency, as generally defined, is a digital representation of value that functions in the same manner as a country’s traditional currency. There are currently more than 1,500 known virtual currencies. Because transactions in virtual currencies can be difficult to trace and have an inherently pseudo-anonymous aspect, some taxpayers may be tempted to hide taxable income from the IRS.
Notice 2014-21 provides that virtual currency is treated as property for U.S. federal tax purposes. General tax principles that apply to property transactions apply to transactions using virtual currency.
Among other things, this means that:
• A payment made using virtual currency is subject to information reporting to the same extent as any other payment made in property.
• Payments using virtual currency made to independent contractors and other service providers are taxable, and self-employment tax rules generally apply. Normally, payers must issue Form 1099-MISC.
• Wages paid to employees using virtual currency are taxable to the employee, must be reported by an employer on a Form W-2 and are subject to federal income tax withholding and payroll taxes.
• Certain third parties who settle payments made in virtual currency on behalf of merchants that accept virtual currency from their customers are required to report payments to those merchants on Form 1099-K, Payment Card and Third Party Network Transactions.
• The character of gain or loss from the sale or exchange of virtual currency depends on whether the virtual currency is a capital asset in the hands of the taxpayer.
by Fresh Start Tax | Jul 30, 2019 | Tax Help
Michael Sullivan Fresh Start Tax Expert
We are a team of tax attorneys, tax lawyers, CPAs and experienced former IRS agents, managers and instructors. We can help you if you are going through any IRS tax audit.
We have been in practice since 1982 on A+ rated. We have worked out a local, district and regional tax offices of the Internal Revenue Service. We are true experts for any IRS tax matters.
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We have worked as former IRS auditors, revenue agents, revenue officers, appellate agents, supervisors and teaching instructors
We know all the IRS systems and closing theories.
What is now happening with the IRS
The Internal Revenue Service is auditing taxpayers who have accounts with virtual currency transactions and cryptocurrency.
This is not to be fooled around with, the Internal Revenue Service has two options:
1.to go after the taxpayer civilly or,
2.criminally if you have infractions.
Please call us today for a free initial tax consultation and let us review for you what your options are at no cost.
The Internal Revenue Service has begun sending letters to taxpayers with virtual currency transactions that potentially failed to report income and pay the resulting tax from virtual currency transactions or did not report their transactions properly.
“Taxpayers should take these letters very seriously by reviewing their tax filings and when appropriate, amend past returns and pay back taxes, interest and penalties,” said IRS Commissioner Chuck Rettig. “The IRS is expanding our efforts involving virtual currency, including increased use of data analytics. We are focused on enforcing the law and helping taxpayers fully understand and meet their obligations.”
The IRS started sending the educational letters to taxpayers last week. By the end of August, more than 10,000 taxpayers will receive these letters. The names of these taxpayers were obtained through various ongoing IRS compliance efforts.
For taxpayers receiving an educational letter, there are three variations:
Letter 6173, Letter 6174 or Letter 6174-A, all three versions strive to help taxpayers understand their tax and filing obligations and how to correct past errors.
Taxpayers are pointed to appropriate information on IRS.gov, including which forms and schedules to use and where to send them.
Last year the IRS announced a Virtual Currency Compliance campaign to address tax noncompliance related to the use of virtual currency through outreach and examinations of taxpayers.
The IRS will remain actively engaged in addressing non-compliance related to virtual currency transactions through a variety of efforts, ranging from taxpayer education to audits to criminal investigations.
Virtual currency is an ongoing focus area for IRS Criminal Investigation.
IRS Notice 2014-21 (PDF) states that virtual currency is property for federal tax purposes and provides guidance on how general federal tax principles apply to virtual currency transactions. Compliance efforts follow these general tax principles.
The IRS will continue to consider and solicit taxpayer and practitioner feedback in education efforts and future guidance.
The IRS anticipates issuing additional legal guidance in this area in the near future.
Taxpayers who do not properly report the income tax consequences of virtual currency transactions are, when appropriate, liable for tax, penalties and interest.
In some cases, taxpayers could be subject to criminal prosecution.
Call us today for a free initial tax consultation and speak to a true IRS tax audit expert.
Los Angeles + IRS Tax Audit Representation Cryptocurrency Experts + Tax Attorney, Tax Lawyer, Former IRS Agents, Nationwide + Since 1982
by Fresh Start Tax | Jul 29, 2019 | Tax Help
We are a team of tax attorneys, tax lawyers, CPAs and experienced former IRS agents, managers and instructors. We can help you if you are going through any IRS tax audit.
We have been in practice since 1982 on A+ rated. We have worked out a local, district and regional tax offices of the Internal Revenue Service. We are true experts for any IRS tax matters.
We have worked as former IRS auditors, revenue agents, revenue officers, appellate agents, supervisors and teaching instructors
We know all the IRS systems and closing theories.
What is now happening with the IRS
The Internal Revenue Service is auditing taxpayers who have accounts with virtual currency transactions and cryptocurrency. This is not to be fooled around with, the Internal Revenue Service has two options:
1.to go after the taxpayer civilly or,
2.criminally if you have infractions.
Please call us today for a free initial tax consultation and let us review for you what your options are at no cost.
The Internal Revenue Service has begun sending letters to taxpayers with virtual currency transactions that potentially failed to report income and pay the resulting tax from virtual currency transactions or did not report their transactions properly.
“Taxpayers should take these letters very seriously by reviewing their tax filings and when appropriate, amend past returns and pay back taxes, interest and penalties,” said IRS Commissioner Chuck Rettig. “The IRS is expanding our efforts involving virtual currency, including increased use of data analytics. We are focused on enforcing the law and helping taxpayers fully understand and meet their obligations.”
The IRS started sending the educational letters to taxpayers last week. By the end of August, more than 10,000 taxpayers will receive these letters. The names of these taxpayers were obtained through various ongoing IRS compliance efforts.
For taxpayers receiving an educational letter, there are three variations:
Letter 6173, Letter 6174 or Letter 6174-A, all three versions strive to help taxpayers understand their tax and filing obligations and how to correct past errors.
Taxpayers are pointed to appropriate information on IRS.gov, including which forms and schedules to use and where to send them.
Last year the IRS announced a Virtual Currency Compliance campaign to address tax noncompliance related to the use of virtual currency through outreach and examinations of taxpayers.
The IRS will remain actively engaged in addressing non-compliance related to virtual currency transactions through a variety of efforts, ranging from taxpayer education to audits to criminal investigations.
Virtual currency is an ongoing focus area for IRS Criminal Investigation.
IRS Notice 2014-21 (PDF) states that virtual currency is property for federal tax purposes and provides guidance on how general federal tax principles apply to virtual currency transactions. Compliance efforts follow these general tax principles.
The IRS will continue to consider and solicit taxpayer and practitioner feedback in education efforts and future guidance.
The IRS anticipates issuing additional legal guidance in this area in the near future.
Taxpayers who do not properly report the income tax consequences of virtual currency transactions are, when appropriate, liable for tax, penalties and interest.
In some cases, taxpayers could be subject to criminal prosecution.
Call us today for a free initial tax consultation and speak to a true IRS tax audit expert.
New York, Manhattan + IRS Tax Audit Cryptocurrency Experts + Tax Attorney, Tax Lawyer, Former IRS Agents, Since 1982
by Fresh Start Tax | Jul 29, 2019 | Tax Help
We are a team of tax attorneys, tax lawyers, CPAs and experienced former IRS agents, managers and instructors. We can help you if you are going through any IRS tax audit.
We have been in practice since 1982 on A+ rated. We been located right here in South Florida and have worked out a local, district and regional tax offices of the Internal Revenue Service. We are true experts for any IRS tax matters.
We have worked as former IRS auditors, revenue agents, revenue officers, appealate agents, supervisors and teaching instructors
We know all the IRS systems and closing theories.
What is now happening with the IRS
The Internal Revenue Service is auditing taxpayers who have accounts with virtual currency transactions and cryptocurrency. This is not to be fooled around with, the Internal Revenue Service has two options:
1.to go after the taxpayer civilly or,
2.criminally if you have infractions.
Please call us today for a free initial tax consultation and let us review for you what your options are at no cost.
The Internal Revenue Service has begun sending letters to taxpayers with virtual currency transactions that potentially failed to report income and pay the resulting tax from virtual currency transactions or did not report their transactions properly.
“Taxpayers should take these letters very seriously by reviewing their tax filings and when appropriate, amend past returns and pay back taxes, interest and penalties,” said IRS Commissioner Chuck Rettig. “The IRS is expanding our efforts involving virtual currency, including increased use of data analytics. We are focused on enforcing the law and helping taxpayers fully understand and meet their obligations.”
The IRS started sending the educational letters to taxpayers last week. By the end of August, more than 10,000 taxpayers will receive these letters. The names of these taxpayers were obtained through various ongoing IRS compliance efforts.
For taxpayers receiving an educational letter, there are three variations:
Letter 6173, Letter 6174 or Letter 6174-A, all three versions strive to help taxpayers understand their tax and filing obligations and how to correct past errors.
Taxpayers are pointed to appropriate information on IRS.gov, including which forms and schedules to use and where to send them.
Last year the IRS announced a Virtual Currency Compliance campaign to address tax noncompliance related to the use of virtual currency through outreach and examinations of taxpayers.
The IRS will remain actively engaged in addressing non-compliance related to virtual currency transactions through a variety of efforts, ranging from taxpayer education to audits to criminal investigations.
Virtual currency is an ongoing focus area for IRS Criminal Investigation.
IRS Notice 2014-21 (PDF) states that virtual currency is property for federal tax purposes and provides guidance on how general federal tax principles apply to virtual currency transactions. Compliance efforts follow these general tax principles.
The IRS will continue to consider and solicit taxpayer and practitioner feedback in education efforts and future guidance.
The IRS anticipates issuing additional legal guidance in this area in the near future.
Taxpayers who do not properly report the income tax consequences of virtual currency transactions are, when appropriate, liable for tax, penalties and interest.
In some cases, taxpayers could be subject to criminal prosecution.
Call us today for a free initial tax consultation and speak to a true IRS tax audit expert.
IRS Tax Audit Experts + Tax Attorney, Tax Lawyer, Former IRS Agents + Virtual Currency Transactions, Cryptocurrency
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