May 4, 2023
Get Ready For IRS Criminal Crackdown On Crypto - Carlos Ortiz, Christina Gotsis and Kayley Sullivan, Law360 ($):
After years of warnings, the time for a significant increase in IRS criminal enforcement against those using digital assets to evade tax liabilities is here.
The 2022 IRS Criminal Investigation annual report, and the agency's Inflation Reduction Act Strategic Operating Plan for fiscal years 2023-2031, identified digital assets as an area of top priority going forward.
The publications convey the IRS' commitment to deploying resources to the investigation and prosecution of unreported gains related to digital asset transactions.
Taxpayers should take note of the IRS' prioritization of identifying digital asset reporting failures and make sure their returns accurately report their crypto transactions.
The IRS started asking a crypto/digital asset question a few years ago on Form 1040. This taxpayer data will likely help move this initiative forward. As the authors mention, we have been waiting.
The debt ceiling conversation continues:
Tax pledge’s father bestows blessing on GOP debt limit package - Paul M. Krawzak, Roll Call:
As House GOP leaders worked to build support for the debt ceiling increase measure they ultimately passed by a razor-thin margin last week, speculation grew that it might violate a long-standing pledge not to raise taxes. In an interview, Norquist explained why his group determined the debt limit legislation would not raise taxes — even though official scorekeepers said it would — which helped Speaker Kevin McCarthy salvage the narrowest of victories.
By signing the pledge, which ATR first introduced in 1986, lawmakers promise they will oppose efforts to raise marginal tax rates for individuals or businesses and oppose any “net” reduction of deductions and credits unless matched dollar for dollar by reducing tax rates.
Members of the House Freedom Caucus successfully pushed for the debt limit bill to repeal more than a half-trillion dollars in “green” energy tax credits that Democrats included in their budget reconciliation law last year.
In analyzing the resulting legislation, the Joint Committee on Taxation estimated that repealing the credits would, even after factoring in other provisions that would reduce revenue, still cause the overall bill to increase revenue by $317 billion over 11 years.
Better IRS service is forcing an earlier debt deadline - Brian Faler, Politico:
There’s a surprising culprit behind the sooner-than-anticipated debt-limit deadline: Better IRS service. It’s not just weaker-than-expected tax receipts that are pushing up the drop-dead deadline for raising the legal cap on borrowing.
It’s also that the IRS is processing people’s tax returns faster. That newfound efficiency prompted forecasters to speed up their estimates of when the government will run out of money to service its debts.
House GOP Plan To Repeal IRA Incentives Would Hike Taxes For Households, Tilted Toward High-Income Earners - John Buhl, Tax Policy Center:
House Republicans on April 26 passed legislation on a party-line vote a bill that would rescind many Inflation Reduction Act (IRA) clean energy tax incentives in exchange for a temporary increase in the federal debt limit. A new Tax Policy Center analysis finds that repealing those tax breaks would reduce after-tax incomes in 2024 by an average of 0.2 percent ($810) for those in the top 20 percent of earners (who make at least $195,000 a year), while low- and middle-income households would face smaller increases.
From the courts:
Mich. Anesthesiologist Owes $930K In FBAR Penalties - Dylan Moroses, Law360 ($).
A Michigan anesthesiologist owes $930,000 in penalties for his willful failure to file reports of his foreign bank accounts, a federal court said in an order granting the government's request for summary judgment.
[NAME REDACTED] failure to disclose his Swiss bank account easily met the standard to be considered a willful violation of Report of Foreign Bank and Financial Accounts, or FBAR, requirements, the Michigan federal court said in an opinion and order Tuesday.
"He exhibited an unmistakable pattern of concealment along with a reckless disregard of his federal reporting obligations that he could have easily ascertained," the court said.
Furthermore, the penalties the government applied were properly administered, not excessive and well within its statutory authority, the court said.
Ga. Man Fails To Respond To Court, Owes $2.7M In Taxes - Anna Scott Farrell, Law360 ($):
A Georgia business owner was ordered to pay $2.7 million in unpaid taxes after he refused to answer the federal government's complaint against him seeking to recover the money, according to a default judgment entered against him by a federal court.
[NAME REDACTED], who was accused in January of failing to pay taxes for four years and using a former company to hide assets, will also lose two properties in Covington, Georgia, to foreclosure, according to the judgment, which was issued Friday and amended Monday to include foreclosure details.
As the IRS increases enforcement related to digital asset reporting, let these two cases provide an important lesson. Report your assets and answer the government's questions!
In the midst of Small Biz Week, it is NATIONAL SELF-EMPLOYED DAY! Contact Eide Bailly to find a CPA or Business Advisor to help you navigate the ever-changing business landscape.
And it can't go without saying Happy Star Wars Day!
This is a roundup of tax news and opinion. Any opinions expressed or implied are those of the author and not necessarily those of Eide Bailly. Opinions found in linked items are those of the authors of the linked item, not of your bloggers or of Eide Bailly. “$” means link may be behind a paywall. Items here do not constitute tax advice.