Damon Rowe, Director of the Anti-Fraud Bureau for the Internal Revenue Service, yesterday at a Federal Bar Association’s anti-fraud presentation announced priorities that the bureau has “added some crown jewels”, including a dedicated team of IRS Criminal Investigation Experts Working on Operation Hidden TreasureOperation Hidden Treasure is comprised of agents trained in cryptocurrency and virtual currency tracking that focus on taxpayers who omit cryptocurrency revenue in their tax returns. Operation Hidden Treasure is a Civil Office partnership for Fight against fraud and the criminal police to eradicate tax evasion by cryptocurrency holders

Carolyn Schenck, & Advisor to the & Assistance Department for the Office of the Chief Counsel, IRS, stated that the IRS is working to “stay ahead of the game” by searching for various “tax evasion” signatures signatures can include “structuring”, that is, literally structuring transactions in steps of less than 10$ 000 to avoid certain reporting requirements, “using nominees, shell corps,” or “getting in and out of the chain” The IRS is working with sophisticated vendors to identify and investigate these tax evasion signatures, as Schenck described the operation Hidden Treasure as “everything about finding, tracking and assigning crypto to US. TaxpayersThe IRS, through its trained agents who work with specialized providers, analyzes “blockchain and de-anonymization of [crypto] transactions” in order to be “able to track crypto in both civil and criminal environments, to find and seize “”

Schenck had a message for crypto traders who are potential tax evaders: “See you”

I’ve previously written about the IRS’s efforts to crack down on cryptocurrency holders and improve compliance in this area. I recently wrote about how the IRS instructions on how crypto account holders should report purchases are far from a model of clarity are

What makes a failure to report something in a tax return – including crypto – criminal?

Any person who willfully in any way attempt to evade or evade a tax imposed by this title or its payment must be in addition to other penalties provided by law

But what does that mean? Tax evasion must be willful, and willful intent is defined as the willful breach of a known legal duty. During the same FBA presentation, James Lee, head of the IRS Criminal Investigation Division stated, “People need to know that there is a consequence if they are deliberately [with Tax obligations] are not compliant, and that consequence will go to jail”Basically, the case can be criminal if the government can show that you knew what you did (or didn’t do) and did it anyway”If you’ve just made a mistake, it’s bourgeois. The adage that a mistake in the law is no excuse doesn’t apply to the penalty tax

Even if the IRS chooses not to pursue criminal charges, the civil ramifications for fraud aren’t exactly a stroll in the park – a penalty of 75% of the tax understatement applies

The Federal Bar Association’s private attorneys agree that these increased enforcement efforts by the IRS will undoubtedly produce results

Steve Toscher, partner at Hochman Salkin Toscher Perez, PC, put it this way; “The new Office of Fraud Enforcement appears to be fundamentally changing tax enforcement. We expect more referrals for prosecution and the claim of 75% penalty for civil fraud Tax laws, including the application of criminal investigations and civil fraud penalties, is essential to the fairness of all taxpayers. The Office of Fraud Enforcement is the product of this increased focus

Sara Neill, a Capes Sokol shareholder, agrees, noting that “things will change” and that tax advisors need to brush up on their criminal defense skills

The Tax Protection Agency has asked the IRS to announce some sort of voluntary disclosure program, similar to the foreign bank disclosure program designed for virtual currency holders to “clean” for years without success, the IRS is unlikely to have such a program Introduces What Should Those Who Have Not Reported Crypto Do?

Yes, you read that right Don’t talk to your accountant about past compliance errors You don’t share attorney and client rights with your accountant Your accountant may be asked to testify against you, may testify against you, or in court Must Provide Information About You To Investigators Only An Attorney Can Have Confidential Communications To You That Will Be Protected From Disclosure By Legal And Client Law difficult situation was brought because the client later “confessed” something he or she did wrong or – worse – said accountants half the truth about the problem and half a lie Taxpayers cannot confess crimes to their accountants and keep them secret because the accountant cannot prevent the government from issuing documents te or force statements through these communications

Although the IRS has not launched a formal voluntary virtual currency taxpayer disclosure program to disclose past errors, a skilled tax advisor who is knowledgeable about cryptocurrency can guide you through the best way to get ahead the attorney can prevent your case from ever becoming criminal by walking you through a civil disclosure or discussing other options

One thing you should never do with the IRS: bury your head in the sand

More excellent articles about the FBA panel and the discussion about Operation Hidden Treasure are behind Paywalls, here (Kristen Parillo at Tax Notes) and here (Allyson Versprille at Bloomberg Tax)

I try tax cases in tax courts and federal courts, represent taxpayers under review by the IRS, and represent tax professionals who get caught up in disciplinary matters

I try tax cases in tax and federal courts, represent taxpayers under review by the IRS, and represent tax professionals who get caught up in disciplinary matters, I’m also a professional partnership agent, my practice is in Chicago, but my clients are chic across the country and around the world Email me at guineveremoore @ mooretaxlawgroupcom and follow me at @Mommytax

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World News – FI – Operation Hidden Treasure Is Here If you haven’t reported Crypto, get legal advice

Source: https://www.forbes.com/sites/irswatch/2021/03/06/operation-hidden-treasure-is-here-if-you-have-unreported-crypto-its-time-to-get-legal-advice/