IRS Begins Criminal Evasion Cryptocurrency Tax Investigations

IRS Begins Criminal Evasion Cryptocurrency Tax Investigations

IRS Begins Criminal Evasion Cryptocurrency Tax Investigations

In the past two years, the IRS started the process of developing and executing investigation techniques for enforcing cryptocurrency compliance. Even though the IRS has not yet issued regulations involving key aspect of cryptocurrency, it is clear they are making enforcement a key priority. If the IRS believes you acted willful in failing to report cryptocurrency transactions, they may move toward both a civil and criminal violation.  This article with summarize the general concepts of how a person may be non-compliant, and therefore subject to a potential investigation.

Here are some of the key points and resources involving cryptocurrency and the IRS:

Cryptocurrency Tax Guide

Cryptocurrency and tax compliance is a tough nut to crack. On the one hand, the IRS does not categorize it as income – even though it is utilized as income. On the other hand, with each transaction, exchange, etc., a person may be subject to an income or capital gains tax (and possibly other taxes depending on how it is held and used).

Resource: Golding & Golding Cryptocurrency Tax Guide.

J5

J5 is was developed in 2018. It is a group of 5 countries  (U.S.., Australia, Canada, U.K. and the Netherlands) who have made cryptocurrency enforcement (including offshore cryptocurrency issues) a key enforcement priority.

Resource: Golding & Golding J5 Summary

IRS Letter 6174

IRS Letter 6174 and 6174-A are designed to place cryptocurrency owners, traders, etc. on notice that the recipient may be on the receiving end of an IRS examination or audit.

Resource: Golding & Golding IRS Letter 6174 summary

FBAR

The IRS has not made any official statement as to whether foreign cryptocurrency is FBAR reportable or not. There have some “roundabout” discussions and representations made, but to date the IRS has not summarily determined if cryptocurrency in bank accounts, investment accounts, etc. is reportable.

Resource: Golding & Golding FBAR Cryptocurrency summary

FATCA

The IRS has also not made any official statement as to whether foreign cryptocurrency is FATCA reportable or not. FATCA is more complicated, since it includes income reporting. Moreover, is cryptocurrency is not technically currency, it is an assets – and foreign assets fall squarely into the reporting requirements of FATCA.

Resource: Golding & Golding FATCA Cryptocurrency summary

Out of Compliance?

If you are out of compliance for international, offshore, or foreign related cryptocurrency issues, Golding & Golding can assist you with safely getting into offshore compliance.

Golding & Golding (Board-Certified Tax Specialist)

We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants and Financial Professionals worldwide.

Recent Streamlined Case Highlights

  • We represented a client in an 8-figure disclosure that spanned 7 countries.
  • We represented a high-net-worth client to facilitate a complex expatriation with offshore disclosure.
  • We represented an overseas family with bringing multiple businesses & personal investments into U.S. tax and offshore compliance.
  • We took over a case from a small firm that unsuccessfully submitted multiple clients to IRS Offshore Disclosure.
  • We successfully completed several recent disclosures for clients with assets ranging from $50,000 – $7,000,000+.

Interested in Learning More?

No matter where in the world you reside, our international tax team can get you IRS offshore compliant. 

Golding & Golding specializes in Streamlined Domestic Offshore Procedures. Contact our firm today for assistance with getting compliant.

Golding and Golding, Board-Certified Tax Law Specialist

Golding and Golding, Board-Certified Tax Law Specialist

Golding & Golding: Our international tax lawyers practice exclusively in the area of IRS Offshore & Voluntary Disclosure. We represent clients in 70+ different countries. Managing Partner Sean M. Golding is a Board-Certified Tax Law Specialist Attorney (a designation earned by < 1% of attorneys nationwide.). He leads a full-service offshore disclosure & tax law firm. Sean and his team have represented thousands of clients nationwide & worldwide in all aspects of IRS offshore & voluntary disclosure and compliance during his 20-year career as an Attorney.

Sean holds a Master's in Tax Law from one of the top Tax LL.M. programs in the country at the University of Denver. He has also earned the prestigious IRS Enrolled Agent credential. Mr. Golding's articles have been referenced in such publications as the Washington Post, Forbes, Nolo, and various Law Journals nationwide.
Golding and Golding, Board-Certified Tax Law Specialist